That brings me back to where I began: with our policy reaction function. Occasionally the markets will be surprised by our policy decisions. But we should do all we can to avoid confusion about how we think about the economy and about monetary policy strategy. In the spring, my own view of the signals from broad money had not altered materially.
So today I have tried to explain how I think about money, credit and the connections between them. That has provided a framework for some observations on the current conjuncture, underlining the need for careful attention to conditions in the banking system. Central banks should be, and need to be, well placed to undertake that analysis, which has rarely been more important than now.