In my remarks this evening, I hope to explain my understanding of what we mean by inflation persistence, and thus how it has and will influence monetary policy decisions. To emphasise from the outset: this is a personal view, not necessarily that of the Committee as whole. In presenting my interpretation, I will address four questions: Why focus on inflation persistence? What is inflation persistence? What drives inflation persistence? And what are the close-to-realtime indicators of inflation persistence on which the MPC is focused? In doing so, I will use one aspect of recent economic experience – specifically the adverse terms of trade shock to the UK stemming from higher imported energy prices – as a ‘case study’ to illustrate my points. By implication – and possibly to the disappointment of some of you – that means I won’t offer a comprehensive assessment of the UK economic situation and outlook in my remarks tonight. And, as a result, I won’t be giving any guidance about the immediate outlook for Bank Rate decisions, which necessarily depends on such an encompassing assessment. Rather my goal is to provide some further insight into the thought process that guides my vote at the MPC: if you like, the thinking behind my own ‘monetary policy reaction function’. Why inflation persistence? The transmission of monetary policy actions to developments in consumer price inflation famously operates with ‘long and variable lags’.
To achieve this goal, we have to build on the best assets of our network: its agility; its technical competence as a “knowledge hub”; and, if I may, the relentless efforts of its Chair, my colleague Frank Elderson, and the commitment of the Banque de France to its global Secretariat. A team of 14 people from the Banque de France is the backbone of the Secretariat, strongly backed by our new Climate Change Center chaired by Nathalie Aufauvre. Given the extension of the NGFS and the deepening of its work, secondments from other NGFS members would be most welcome to contribute to the dynamism of the Network, through one year stays, on site, in Paris, or flexible options including remote work. And we intend to  strengthen our efforts to communicate and disseminate the work of the NGFS among our membership and beyond. We have increased means, and still many avenues to explore. If I had to stress only two tasks where our whole global community needs the NGFS: (i) climaterelated economic scenarios. We released a first wave in July 2020, we will update them next week. I read some unfounded doubts on them: NGFS works with the best partner research institutes, publishes a range of plausible and differentiated futures – not intended to be central forecast –, and will regularly incorporate the development of scientific evidence. This provides, as a common public good for COP26, the best reliable framework for financial risk assessment.