I would particularly like to thank Saba Alam, Gillian Anderson, Filippo Busetto, Harvey Daniell, Andrew Gaffney and Alex Rattan for their help in preparing this speech. I have received helpful comments from Andrew Bailey, Ben Broadbent, Rich Harrison, Jonathan Haskel, Andrew Hauser, Bob Hills, Neil Kisserli, Rhys Phillips, Dave Ramsden, Matt RobertsSklar, Andrea Rosen, Michael Saunders, Fergal Shortall, Tom Smith and Silvana Tenyero, for which I am most grateful. References A. Bailey, J. Bridges, R. Harrison, J. Jones and A. Mankodi (2020). ‘The central bank balance sheet as a policy tool: past, present and future,’ Bank of England staff working paper no. 899. Broadbent, B. (2022). ‘Reliable partners,’ speech given at Gresham College, London. Busetto, F., M. Chavaz, M. Froemel, M. Joyce, I. Kaminska and J. Worlidge (2022). ‘QE at the Bank of England: A perspective on its functioning and effectiveness,’ Bank of England Quarterly Bulletin Q1. Evans, C.L., J.D.M. Fisher, F. Gourio and S. Krane (2015). ‘Risk management for monetary policy near the zero lower bound  ,’ Brookings Papers on Economic Activity (Spring), pp. 141-196. Mann, C.L. (2022). ‘A monetary policymaker faces uncertainty,’ speech given at a Bank of  Page 18  England webinar. Nickell, S. (2005). ‘Why Has Inflation Been So Low Since 1999? ’ Bank of England Quarterly  Bulletin 45, pp. 92-107. Pill, H. (2022). ‘Monetary policy with a steady hand,’ speech given at the Society of Professional Economists online conference. Pill, H. (2021).
[15] In this context, the MPC needs to ensure that domestic price setting does not achieve a selfsustaining, expectationally-driven momentum, which would maintain inflation at elevated levels even as the direct external impulse coming from commodity prices recedes and unemployment starts to rise. Avoiding any drift towards the embedding of such ‘inflationary psychology’ into the price setting process is crucial. With that in mind, and after a very prolonged period of supportive monetary policy in the United Kingdom since the onset of the global financial crisis, the time has now come to withdraw that accommodation in the interest of returning inflation to target in a sustainable way. It is the need for a continuation of this transition in monetary policy that led me to support the 25bp hike in Bank Rate at the May MPC meeting. And, even after this hike, I still view that necessary transition as incomplete. Further work needs to be done. Chart 9: Inflation forecast conditional on alternative assumptions about the path of Bank Rate(a)  (a)This chart shows central projections drawn from fan charts shown in the May 2022 MPR. These depict the modal outcome for CPI inflation in the future, conditioned on an assumption of constant interest rates at 1% and on an assumption that interest rates would follow the market implied curve. Please see the May 2022 MPR report for information on the conditioning assumptions underlying the forecast.