The projections for inflation were the highest ever published by the Bank, while the forecasts for output growth were the lowest ever published. In other words, these projections highlighted the difficult trade-off facing the MPC in keeping inflation close to target, while supporting output and jobs growth in the economy. In the MPC’s judgement in November, managing this trade-off was best achieved by maintaining the current monetary policy stance, with a neutral bias on the direction of the next move in interest rates. Consistent with this neutral bias, the MPC judged the risks to inflation and output to be broadly symmetric and, given heightened uncertainty since the referendum, larger than usual. My own personal judgement on the appropriate monetary policy stance is close to the MPC consensus. In August, I believed the risks to inflation and output lay to the downside, even after the stimulus measures. 20  See http://www.bankofengland.co.uk/research/Pages/onebank/decisionmakerpanel.aspx. 12  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  12  That is why I supported forward guidance on a further lowering of interest rates in the run-up to the end of the year, provided the economy evolved in line with the MPC’s projections for inflation and output at the time. In the event, output has out-performed those expectations, while expectations of inflation have picked up, largely as a result of sterling’s depreciation. That configuration now leaves me comfortable with the current stance of monetary policy, with no bias on the direction of the next move in interest rates.
To complete the picture, net wealth has also risen across the majority of regions since 2008, on average by 13% (Chart 13a). In only three regions (the North East, East Midlands and West Midlands) has net wealth fallen. These patterns are broadly as we would expect if monetary policy has loosened credit conditions, boosted asset prices and wealth and thereby supported domestic demand, at least in the short-run. That said, this is a rather imperfect experiment. Factors others than monetary policy are also likely to have contributed to movements in GDP, unemployment and wealth (in particular housing wealth) over that period. To pinpoint the specific contribution made by monetary policy, we need a model of the economy. By using the Bank of England’s suite of macro-economic models, we can quantify the specific role played by monetary policy in explaining movements in incomes and jobs, albeit rather imperfectly given that all models are imperfect. Charts 11b, 12b and 13b plot the change in real GDP per head, unemployment and wealth respectively since 2008, under the hypothetical assumption that monetary policy had not been loosened over the period but had remained at levels prevailing in 2008. 17  This paints a stark picture of what might have been in the  UK. 16  This is set against a trend decline in global real interest rates and what economists refer to as the ‘neutral’ level of interest rates.