And when the economy is operating at capacity, production resources can be more effectively reallocated from sectors where demand is relatively weak to where demand is relatively strong. Recent economic developments Let me now say a word about the economy. Since the Bank's last fixed announcement date on 24 May, a number of economic indicators have been published.
Inevitably, the process of unpicking and understanding shocks and complex interactions affecting the economy is an ongoing task. And that raises the challenging question of how the monetary policymaker should respond to this changing environment. Clearly we need to be sure that the analysis underpinning policy decisions incorporates an appropriate understanding of the complexities of our global system.