My purpose today is to explain how this recession differs from the others I have lived through, why that calls for a wider range of responses than normal, and the difference between the policy objectives in the medium term and the short term. The boom before the bust? What is striking about the run-up to this recession is that we did not see the booms in output, employment and wages that led to past recessions. Past recessions, in good measure, reflected deliberate decisions by policymakers to rein in spending and damp the inflationary pressures that had been building up. The rise in interest rates then led to a correction in the spending behaviour of households and companies as optimism about future income growth in the boom turned to uncertainty and gloom in the bust. Chart 1 highlights what was happening to domestic output in the two years before the last three recessions. The Barber Boom was a case in point, when output rose by 10% over the  BIS Review 5/2009  1  year to 1973 Q1, and then fell by 3% over the following year. You can see a similar pattern before the recessions of the early 80s and early 90s. But in 2006 and early 2007 growth was close to its average over the past 30 years. That is not the whole story of course. When we look at asset markets, a different story emerges.
So as members of the Monetary Policy Committee we see it as more important than ever to make visits such as this so that we can talk to businesses face to face about the conditions they are experiencing on the ground. And every month our Agents in the regions, including the North West, give us a comprehensive report based on a large number of meetings with contacts in all sectors of the economy. 2009 is certain to be a difficult year for the UK and the global economy more generally. In the United Kingdom, we expect the sharpest fall in output for decades while on some measures, retail prices are likely to fall for the first time in almost half a century. We are not alone in our difficulties. Most of our major trading partners are also entering recession. A decade or more of remarkable macroeconomic stability; the Great Stability as economists called it, has come to a shuddering halt. These exceptional developments have led already to exceptional policy measures. Here in the United Kingdom, the government has set in train a fiscal expansion and has stepped in to support the banking system and lending. And earlier this month, we reduced official interest rates to an historic low of 1.5%. Similar measures have been taken overseas.