This guidance was grounded in an early exposition of why r* was low and not expected to recover soon.7 Secular drivers that had pushed down the equilibrium rate prior to the crisis – including slower potential growth, demographic forces, changes in income distribution and excess saving in emerging markets – were likely to persist. The MPC judged there is a further wedge pushing r* in the UK below global r* because of fiscal drag and heightened uncertainty.8 The MPC clearly signalled that the policy path was likely to be very different from during past recoveries. It observed that the appropriate path of interest rate increases to eliminate slack and keep inflation close to the target was expected to be gradual and, even once spare capacity had been absorbed, the appropriate level of Bank Rate was expected to be materially below the pre-crisis average of 5%. This may be obvious now, but it wasn’t then when it mattered most. Importantly, the interest rate expectations of UK households and businesses have remained well anchored both as the recovery has progressed and even as policy was tightened in November 2017 and August 2018 (Chart 5). See Carney, M (2013), “The spirit of the season” at The Economic Club of New York; and the box on page 42 of the August 2014 Inflation Report. 8 See the box on page 39 of the August 2018 Inflation Report.
For similar reasons to the ECB, we moved from twelve to eight meetings per year, and we began publishing a statement every time we met and releasing Minutes, Inflation Reports and Monetary Policy Summaries simultaneously on the logic that one decision should merit only one news event. The MPC now provides much more detailed information on the assumptions that underlie our forecasts and regularly assesses them versus actual outturns. We release our key judgements for the global economy, domestic demand and the pace of demand relative to supply capacity, and we publish paths for variables that we and others can monitor to see whether the forecast is on track. We also now publish annual stock takes of the supply side of the economy and of the forecast errors we have made over the past year. Last year, the MPC introduced layered communication to reach the broadest possible audience. In addition to the Inflation Report we now publish a visual summary, or top layer, which distils the document down to its main messages with a few accompanying diagrams. It is intended for a non-technical audience. Following  5  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  5  the changes, we have seen web traffic to Inflation Report pages increase by a third and research suggests that public understanding has increased by a quarter.4 The biggest innovation in communication has been the introduction of forward guidance as a tool to influence short-term interest rates once policy rates hit the effective lower bound.