4 For a full discussion of wage growth, see Cunliffe (2017) 3  7  All speeches are available online at www.bankofengland.co.uk/speeches  7  judging the appropriate balance to be struck when faced with a trade-off between returning inflation sustainably to target and supporting jobs and activity, one must pay close attention to any sign that above target inflation is feeding through to ‘second round’ effects in domestic costs. So far that doesn’t seem to be the case. In summary, it is difficult to determine precisely why the supply side of the economy has behaved as it has in the period since the referendum. The weakness in real wage growth, and the subdued nature of domestically generated inflation mean I am not yet ready to discount the idea that labour market flexibility is continuing to intensify. If true it would mean there is a little more room than headline measures of slack suggest for the economy to grow without generating above-target inflation in the medium term. For that reason, in our November meeting I was willing to wait for more evidence on the evolution of wage and domestic cost growth before beginning to withdraw some monetary stimulus. So I voted for no change in Bank Rate. Deliver Once the decision is made, attention turns to the final phase of ‘end to end’ monetary policy: Deliver. A key part of being Deputy Governor for Markets and Banking is responsibility for delivering much of the Bank’s monetary, and indeed financial stability, operations.
By de-politicising the short run trade-off between inflation and activity, this arrangement has provided the grounds for the most successful monetary policy regime for the UK thus far. The MPC’s flexible inflationtargeting framework was further strengthened by the 2013 Treasury Review and the following Remit update which effectively ‘completed the contract’ by further specifying the relationship between the MPC’s primary objective for price stability, and its secondary objective to support jobs and growth. Though, having overseen the 2013 Review, I must declare an interest in judging its contribution. Since then, the Remit has explicitly acknowledged that, in exceptional circumstances shocks to the economy may be particularly large or the effects of shocks may persist over an extended period. In such a period the  1  Carney M (2017), remarks given at a conference to mark 20 years of the MPC’s operational independence, notes that Governor Eddie George once remarked that in the half century that followed the Bank’s nationalisation in 1946 it “operated under legislation which, remarkably did not attempt to define our objectives or functions.” 3  All speeches are available online at www.bankofengland.co.uk/speeches  3  MPC must balance the trade-off between the speed with which inflation is brought back to the target and the consideration that should be placed on the variability of jobs and economic activity.