The last year has been characterised by large moves in exchange rates and falls in risky asset prices but the repricing of government bonds and of expectations for monetary policy have been particularly striking. Significant UK specific factors emerged in September and October, which have been covered in detail elsewhere12. The UK policy premia which opened up have now disappeared. The cumulative increase in yields on UK 10 gilts over the last year is now very closely in line with the change in US and German 10 year bonds (Chart 7). Having peaked at 4.6% in late September yields on 10 year gilts were back down at 3.2% at close yesterday, their level at the start of September. Source: Bloomberg L.P., and Bank calculations Notes: The path for Bank Rate implied by forward market interest rates are based on overnight index swap rates. Latest yield curve refers to forward market interest rates at cob 21 November 2021. UK fiscal policy developments in response to the energy price shock have been a key contributor to the outlook for inflation. In early September the Government announced an Energy Price Guarantee (EPG) for households (and a business equivalent) to cap average energy bills at £ up until April 2023. In the Autumn Statement on 17 November, the Government announced an increase in the cap to £ for the year to April 2024.
Bank of England  Page 1  That was the year that was − speech by Dave Ramsden Given at Bank of England Watchers’ Conference organised by the Money Macro Finance Society and King’s Business School at King’s College London 24 November 2022  Bank of England  Page 2  Speech Thank you for the invitation to speak today. I am particularly pleased that I have close links with the two institutions, the Money Macro and Finance Society and Kings College London, who have organised this first Bank-watchers’ conference. In the spirit of the sixty year old TV programme that inspired my title I want to give my personal review of why the economy, and in particular inflation, turned out to be very different over the past year, and suggest some potential consequences for the MPC’s approach to forecasting the economy and setting policy to hit the 2% inflation target. As a member of the MPC I hope to be able to do justice to how our thinking has evolved but I should stress at the outset that these are personal observations, which will nevertheless hopefully help set the scene for discussions at this conference. In my other monetary policy speeches this year I’ve focused on the impact of shocks. Today I’m going to look more through the lens of the uncertainty generated by those shocks, which has made the course of the economy in general and inflation in particular increasingly hard to predict1.