If you look it up in the Report you will see that according to our estimate only a very small amount of excess supply – ¼% of GDP – remained in the economy. But we couldn’t be certain of this. Even in the most benign interpretation the economy had gone through a temporary soft patch. The majority of indicators were pointing in one direction. And it felt like there was at least a risk that, perhaps reflecting the unusual position of the UK, something more material was going on – perhaps one of the risks I highlighted earlier was crystallising. That was why I, along with the majority of the Committee, decided to vote again to leave Bank Rate unchanged. How do I see the economy evolving from here? It is still early days. We are still only two thirds of the way through Q2, less far through the Q2 data cycle, and only a month has passed since our last MPC meeting. Even so, the data we have had so far suggests our interpretation of the slowdown in Q1 as temporary looks to be being borne out. Consumer confidence and consumer credit both picked up in the latest data, as did retail sales and several business surveys. That included the latest services PMI output balance, representing 80% of the economy. So far at least our May judgement looks on track. Looking ahead, my central expectation for the economy is in line with the MPC’s best collective judgement as expressed in our inflation report forecasts.
13  Note that it may sometimes instead be a case of refraining from cutting the rate where this might otherwise have been justified. 6  BIS central bankers’ speeches  developments, but it is rather the communication in itself that has the dampening effect. In this case, the impact on the rest of the economy need not be so great either. The fact that communication on monetary policy can play an important role in this context is emphasised by, for instance, Mark Carney, Governor of the Bank of Canada and soon to be Governor of the Bank of England: “[P]rivate agents may choose to accumulate less debt if they understand that a broad-based build-up of debt is likely to cause the central bank to raise interest rates.”14 Monetary policy is expansionary It should be fairly clear that it is precisely this type of "signalling strategy" that the Riksbank has used. Monetary policy since the crisis has not entailed using sky-high interest rates to stop an upswing in lending and housing prices, at any cost. What we have tried to do is to find a suitable balance to be able to support the recovery, without “pressing too hard on the accelerator”, thereby contributing at least at the margin to a calmer development in house prices and lending to households. It can hardly be claimed that the policy conducted by the Riksbank during the recovery from the crisis has been tight or that the current policy rate level does not contribute to boosting economic activity.