‘Debt Strikes Back’ or ‘The Return of the Regulator’? Alex Brazier Executive Director, Financial Director for Financial Stability Strategy and Risk Member of the Financial Policy Committee Bank of England  University of Liverpool, Institute for Risk and Uncertainty Monday 24 July 2017  I am grateful to David Baumslag, Jonathan Bridges, Liam Kirwin, Iren Levina, Vas Madouros, David Seaward, Sagar Shah, Gavin Wallis and Mina Yau for their help in preparing these remarks. 1  All speeches are available online at www.bankofengland.co.uk/speeches  It is an honour to be invited to contribute to this lecture series here at the Institute for Risk and Uncertainty. Thinking about risk sometimes has a more derogatory description: worrying. And worrying has a bad name for itself as an unproductive, possibly harmful, activity. But intelligent worry – worry about what could go wrong and action to deal with it before it does – is central to the aim that this Institute and the Bank of England share: creating a safer world. So in much the same way that Star Wars fans must enjoy conventions that bring together like-minded people, whose interest is not always appreciated by others, it is a pleasure to be here with fellow intelligent worriers. 1  With household debt at high levels and after a period in which consumer debt has increased very rapidly, my theme this evening draws inspiration from the Star Wars films.
The ECB pursues this objective in a consistent and forward-looking manner, ensuring the confidence of all policy-makers, both within and outside the euro area. Experience so far suggests that the ECB has been able to keep inflationary expectations at a low level. Although current HICP figures in the euro area are adversely affected by energy and food prices, the current outlook is compatible with the maintenance of price stability in the medium term. This view is supported by the analysis of bond yields. It is comforting to see that market participants expect medium-term price developments to remain in line with the ECB's definition of price stability. Currently available forecasts give rise to the expectation that inflation will again fall below 2% in 2002. Hence, we appear to be on the right track. However, we must not ignore existing risks to price stability. The Governing Council of the ECB therefore always stresses that it is vigilant and will take into account all new information that might affect the outlook for price stability in the medium term. Let me now conclude by recalling that, while the ECB cannot be held accountable for growth in the euro area, interest rates in the euro area have been relatively low, and cannot, by any means, be considered to be an obstacle to growth. Currently, although uncertainty remains high, the general expectation is that growth in the euro area will remain at, or slightly above, trend potential growth in the period ahead.