As we might expect, there are large differences in both the channels and scale of impact across these three cohorts, though in each case the net effect is strongly positive. As a point of comparison, Figure 5 gives a scorecard for the relatively small set of households for whom the net effects have been negative – a retired household renting a property whose wealth is held mainly in deposits. In principle, this sort of personalised monetary policy scorecard could be drawn up at any level of disaggregation and for any monetary intervention, past or present. Clearly, the results and methodology underpinning any scorecard-type approach need to be treated with caution. For example, there are wide confidence intervals around the estimates presented here. 44  There are various ways to calculate the income-equivalence of the lower probability of unemployment, and these numbers would vary depending on the assumptions made. For simplicity, we exploit the results from our analysis, which show the effect on welfare from the lower probability of unemployment on the average household to be around six times larger than the welfare boost from higher labour income. This ratio is then applied to the boost to labour income experienced by different cohorts in Figures 1-5. 45 The cost of monetary policy, broadly defined, was £ in 2017, and there are around 27.2mn households in the UK. The cost of monetary policy includes the Bank’s monetary analysis area and the relevant share of other business areas’ (research, statistics, markets, banking, HR, technology etc.) expenses toward monetary policy.
This should probably be considered an upper bound. 16  All speeches are available online at www.bankofengland.co.uk/speeches  16  These sorts of evaluation also have greatest value when conducted at times of significant change in the monetary policy stance or when this change is not expected. That is to say, they are probably best undertaken periodically rather than regularly. One important point is that the interpretation of these evaluations depends greatly on the reasons monetary policy is changing in the first place. For example, the loosening of monetary policy in the case study was positive for most households. But that does not imply a tightening of monetary policy would thus be negative for household finances and welfare. For example, if this tightening came in response to a stronger economy, and helped avoid inflation overshooting its target requiring higher-still interest rates, its effects are likely to be positive too. This suggests these scorecard exercises are likely to be context-specific and hence are best done periodically at times of significant change to the monetary stance. Reporting its effects in a disaggregated way should not call into question the purpose of monetary policy which, as set in statute, is to stabilise aggregate economic activity and prices. Nor does it imply monetary tools should be used to meet distributional ends. Rather, its purpose would be to improve public understanding of the effects of monetary policy. This would hopefully help close the public perception gap 46  about the effects of monetary policy and the trust deficit facing monetary policymakers.