36  20  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  20  These visits have subsequently become an established part of the Bank’s engagement programme.40 We now have a well-developed network of Citizens Panels across all regions of the UK, as well as a Youth Forum. These meet regularly, hosted by senior Bank staff with an independent chair, and comprise a diverse spectrum of the public. The issues raised at these fora are published annually. We also have a programme of Community Forums, which engage with local charities and community groups on local issues. Complementing these engagement initiatives, I have helped oversee the Bank’s educational engagement programme over the past few years, including the development of curriculum materials for 11-16 year olds (EconoMe) and 8-11 year olds (Money and Me), the latter in partnership with the Times Educational Supplement and the Beano. This has given the Bank a face and a footprint among millions of early learners. That, I hope, will bear longer-term fruit for both those learners and the Bank. Finally, I set up and ran the Bank’s Flagship seminar programme. This has brought in a diverse set of inspirational speakers – from Grayson Perry to Michael Holding, from Prue Leith to Doreen Lawrence, from Trevor MacDonald to Billy Bragg. It has provided Bank staff, and the wider public, with a wider angle lens on the most pressing societal issues of the day.
We would experience a Minsky Moment for monetary policy, a taper tantrum without the taper.10 This would leave monetary policy needing to play catch-up to re-anchor inflation expectations through materially larger and/or faster interest rate rises than are currently expected. Even if this scenario is a risk rather than a central view, it is a risk that is rising fast and which is best managed ex-ante rather than responded to ex-post. If this risk were to be realised, everyone would lose – central banks with missed mandates needing to execute an economic hand-brake turn, businesses and households facing a higher cost of borrowing and living, and governments facing rising debt-servicing costs. As in the past, avoiding that inflation surprise is one of the central tasks of central banks. These near-term inflation concerns also have a bearing on the medium-term risks facing central banks. After the Global Financial Crisis, central banks went in large and fast with QE, I believe rightly, to support the economy. They then withdrew that stimulus slowly, if at all, to protect the fragile recovery – again, I believe rightly. As a result of these actions, central banks’ balance sheets, including the Bank’s, inflated quickly and never subsequently deflated. When the Covid crisis struck, central banks again went in large and fast to protect a collapsing economy, I believe rightly. Balance sheets ratcheted higher. On current expectations, central bank balance sheets are unlikely to deflate any faster than after the Global Financial Crisis. But this time that policy script feels stretched.