Since the end of 1992 output has grown at an average annual rate of 2.8%, well above the post-war average. More significantly, growth was more stable, with a standard deviation less than one-half that of output growth in earlier post-war decades. And unemployment, as measured by the Labour Force Survey, has fallen from 10.7% at its peak in 1993 to a current level of 6.3%. So since the inflation target was adopted inflation has been lower, and growth as high, as in any post-war decade, and both have been more stable. And total output in the economy has now increased for 27 consecutive quarters, the longest period of uninterrupted growth since the Second World War. Part of the credit for this improvement in UK macroeconomic performance belongs to the policy framework (both pre- and post-MPC), and part was the result of favourable economic circumstances. From 1992 to 1996, the ability to grow at above trend rates without an increase in inflationary pressure was made possible by using up the margin of spare capacity created by the deep recession of the early 1990s. After 1996, inflationary pressures were contained by lower commodity and other world prices, and the impact of a sharp appreciation of sterling. These developments have had a significant impact on inflation. And they were largely unpredicted. So, although monetary policy has faced some difficult choices over the past two years, it has benefited from an unexpected downward movement in imported inflation. These external influences have offset a much higher level of domestically generated inflation.
Ben Broadbent: Monetary policy, asset prices and distribution Speech by Mr Ben Broadbent, Deputy Governor for Monetary Policy of the Bank of England, at the Society of Business Economists Annual Conference, London, 23 October 2014. *  *  *  I would like to thank Alina Barnett for research assistance and I am also grateful for helpful comments from other colleagues in particular from Richard Harrison, David Learmonth and Gareth Ramsay. The views expressed are my own and do not necessarily reflect those of the Bank of England or other members of the Monetary Policy Committee. A few years ago, I used to take the overground train into work. The line was cluttered with stations – mine was barely 400 yards on from the previous stop. So you can understand why my fellow commuters were less than convinced one morning when, seeking to explain why our train was 20 minutes overdue, the driver said this was “because we left the last station late”. It raised a smile. But it wasn’t an explanation. I confess I have a similar reaction to accounts that seek to “explain” low interest rates, and the behaviour of asset prices more generally, solely by reference to what central banks have done. This is especially true when those accounts go on to attribute significant and lasting redistributive effects to these policies. For example, and at least when they happen to be going up, it’s quite common to hear that equity markets are benefiting from “easy money”.