So I am very grateful for the opportunity to expand on our role here today. I want to cover three main themes. First, I want to explain the Bank's approach to the exercise of monetary policy, and then, second, give you some assessment of the current state of the British economy. And, third, I want to discuss the Bank's other key role - that of maintaining financial stability in the system as a whole. That role is, I think, less well understood than our monetary policy responsibilities. But financial stability is every bit as crucial to our national welfare. So I'd like to spend a few minutes setting out our objectives, and picking up on one or two themes of current concern. Maintaining monetary stability I turn first, though, to the Bank's better known role, that of maintaining monetary stability. Our target for monetary policy is extremely clear. We aim for 2½% inflation in retail prices (excluding mortgage payments) at all times. That target is set by the Chancellor. And it is symmetric: that is to say, we worry as much about being below the target as we do about being above it. That makes sense because the problems of severe deflation are just as great as the problems of severe inflation. Since May 1997, when the current arrangements were put in place, RPIX inflation has averaged 2.3%.
It is clear that the events of 11 September, and their aftermath, have given rise to considerable uncertainties. There is plenty, particularly overseas, for central bankers to concern themselves with. When I spoke at a conference last week, one newspaper commented that I always looked worried. Well, of course, central bankers are paid to worry. But when reviewing the economic situation we need to achieve a sense of balance. The data do not all point in a single direction. Certainly in the run-up to the November MPC meeting we will need to take a careful look, as I indicated earlier, at all the data. Our feet will be on the ground, but our eyes will scan the horizon! Thank you very much. 4  BIS Review 87/2001