The Survey is a very extensive study in which over 8,000 people were interviewed and asked – among other issues – about their financial knowledge; their holding and acquiring of saving, credit and insurance products; their work-related expectations; and their attitudes to consumption and saving. It is the most comprehensive, representative and internationally comparable information source available on Spanish citizens’ financial competences. 3/8  It is, therefore, a most useful survey. And it is novel regarding the additional information it provides on the social and economic context in which Spaniards take their financial decisions. In this connection, it measures competences which, without being strictly financial, can indeed affect peoples’ decisions, such as their degree of reading comprehension and their ability to understand specific graphics. The Survey thus provides us with a sound database for assessing our efforts to increase financial literacy. I encourage you, as specialists in this area, to exploit it by using both its aggregate findings and its microdata, which are available for research on the Banco de España’s Internet portal.1 With regard to the population’s financial knowledge, the Survey shows that an extensive group of Spaniards are not familiar with basic concepts such as inflation, interest rates or risk diversification. To answer correctly the question on inflation in the Survey requires understanding that an amount of money loses purchasing power when prices rise. 42% of interviewees are not able to answer this question correctly.
We expect that to weigh heavily on demand. We judge the appropriate degree of monetary tightening taking that into account. What I reject is the argument that in our response to Covid the Bank’s Monetary Policy Committee let demand get out of hand and thus stoked inflation. The facts simply do not support this. On the latest number, UK GDP in March was only 0.6% above its pre-Covid level, and it is substantially below the path it was expected to follow pre-Covid. What we do have is a very tight labour market. But that does not look like a story about rapid demand growth. The labour force has shrunk by around 1% since the onset of Covid. It looks much more like an impact from the supply of labour. The job of the Bank of England is to return inflation to target at a time when a very large headwind from external shocks, and an internal shock from a fall in the labour force, are reducing real incomes but risk leading to persistence in domestic wage and price setting, socalled second round effects. The Bank of England will, as always, take monetary policy decisions to ensure that the inflation target is met over the medium term. We have raised the official rate four times so far and have made clear that in order to bring inflation down to target we are prepared to do so again based on the assessment at each of our meetings.