That is why the MPC has placed such weight on its forthcoming forecast round, where a comprehensive and encompassing assessment of all sources of relevant information can be made, which internalises the interactions and interdependencies among various time series. But I realise that saying all information is potentially equally important runs the risk of suggesting that all information equally unimportant. To give an insight into my decision process, some hierarchy of analysis is required. So, I will highlight here three areas that weigh heavily at present on my thinking. First, fiscal policy. Over the summer, there has been considerable news on this dimension, which the MPC only partially digested in its September policy assessment and decision. I have already mentioned the Energy Price Guarantee. Relative to where we might otherwise have expected to be early next year on the basis of wholesale gas futures prices, the introduction of the £ cap on an average energy bill directly reduces CPI inflation. Of itself, the resulting lower and flatter profile for headline inflation should diminish the risks coming from potential second round effects, and a make shift towards more inflationary psychology less likely. Against that, lower utility bills will support current household real incomes and thereby support consumption demand. With demand pressure more sustained than otherwise, inflationary pressures may prove more persistent than would have been expected. On balance, I would expect the net effect of these various channels to add to inflationary pressures at the traditional monetary policy relevant horizon of around two years.
Now that the UK Government's fiscal energy measures have been announced, the more comprehensive, integrated assessment that will be embodied in our November forecast can resume its central place in our analysis for, and communication of, monetary policy decisions. The EPG has capped the expected average energy bill at £ for the next two years, a substantially lower level than the earlier Ofgem price cap mechanism would have implied given the evolution of wholesale gas prices. Steps have also been taken to help firms. Higher gas prices will now increase the (indirect) government subsidy to energy users, rather than the utility bills they pay. This shifts the main macro risks stemming from gas price rises away from higher headline inflation and a squeeze on household real incomes towards greater pressure on the fiscal deficit and ultimately the public finances more widely. Ensuring that this shift – in concert with other fiscal policy actions – does not bring the longer-term sustainability of the public finances or respect for the wider institutional  3/8  BIS - Central bankers' speeches  framework for macroeconomic policy into question remains key: both in and of itself, but also because maintaining the credibility and integrity of that framework supports the effectiveness of monetary policy in pursuing its own objectives. In this context, it is welcome that the role played by the Office for Budget Responsibility (OBR) in scrutinising the Government's fiscal plans will be resumed in the forthcoming budget statement.