The dotted line below, in Chart 6, seeks to get the point across. It’s the outcome of a simulation in which the monetary authority periodically publishes a plan for future interest rates. People believe the plan but the monetary authority only gets to change it intermittently. In the meantime, and no matter what crops up in the economy, it’s obliged to follow the most recently published path. The idea is to convey the flavour of what happens when the central bank is (or feels) obliged routinely to “pre-announce” a path for interest rates but can only update that path now and then. Remember that this is a model in which forward interest rates have a powerful impact on current demand and economic activity. So living with the “wrong” forward rate – one that fails to respond to incoming news – can be pretty costly. In reality the economy is almost certainly less sensitive to expected future interest rates than assumed here, and the dotted line wouldn’t be so far above the others. But qualitatively, at least, it gets the problem across. Sought for its own sake, greater stability and predictability of interest rates can come at the cost of less stability in demand and inflation (i.e. the central bank’s ultimate objectives). Chart 6.
3  All speeches are available online at www.bankofengland.co.uk/news/speeches  3  Throughout our work on AI/ML we want to enable safe innovation. We are open to use of this technology, but with proper scrutiny to the practical details. This is how we balance the competing demands of our primary objectives, which include ensuring financial stability and ensuring safety and soundness of firms, and our secondary objectives such as promoting competition. Open to new firms entering  My second theme is the importance we at the Bank of England attach to being open to new firms entering markets. In addition to supporting new ideas and approaches, fintech is creating a more open, competitive and diverse financial ecosystem. At the Bank of England, we see more businesses working on identifying and solving global financial challenges as a welcome development. It is clear that on several dimensions today’s financial system offers an imperfect service, including the cost and efficiency of domestic and cross-border payments and access for the disadvantaged or excluded. We want to improve the service consumers and businesses receive, without compromising our regulatory perimeter or undermining the ‘same risk -same regulation’ principle that underpins our approach. At the heart of our vision for these improvements is putting consumers at the centre and empowering them to take full benefit from their data. I will discuss this in more detail at tomorrow’s panel session on SME financing.