Archive

Ramsden - Outlier or laggard: divergence and convergence in the UK’s recent inflation performance

Dave Ramsden provides an update on his assessment of the evidence on what has caused the UK’s inflation. The evidence covers the key indicators of inflation persistence and associated analysis and what this implies for the extent to which the risks from persistence are receding.

In his speech, Dave Ramsden discusses the recent inflation performance in the UK, focusing on the persistence of inflationary pressures and the risks associated with them. He highlights that the UK was previously an outlier in terms of inflation performance but is now becoming a laggard, catching up to the levels seen in the US and Euro area. Ramsden expects headline CPI inflation to fall sharply in April, close to the 2% target. He notes that inflation expectations have decreased, leading to weaker pay growth, which in turn has started to impact services inflation. Overall, Ramsden concludes that the balance of domestic risks to UK inflation is now tilted to the downside.


Positivity: 80
Uncertainty: 60

de Guindos - Presentation of the ECB Annual Report 2023 to the Committee on Economic and Monetary Affairs of the European Parliament

Introductory remarks by Luis de Guindos, Vice-President of the ECB, at the ECON Committee of the European Parliament

In his remarks, Vice-President of the ECB, Luis de Guindos, discusses the economic outlook for the euro area and the monetary policy decisions taken by the ECB. He mentions that euro area growth slowed in 2023 and that inflation declined over the course of the year. Economic indicators suggest a weak start to the year, but gradual recovery is expected. Inflation is anticipated to continue declining, although at a slower pace. The ECB raised its key policy rates in response to heightened inflation and will maintain restrictive policy rates for as long as necessary. Liquidity will be provided through various instruments, including regular refinancing operations and new credit operations. The financial sector in the euro area remains strong, but challenges could arise from weakened growth prospects, prolonged inflation above target, or geopolitical risks. Legislative work is needed to close gaps in the banking union. Additionally, progress is necessary in advancing the capital markets union (CMU) agenda.


Positivity score: 80
Uncertainty score: 70

Jefferson - Economic Uncertainty and the Evolution of Monetary Policymaking

In this speech, Philip Jefferson discusses the importance of understanding uncertainty in monetary policy decision-making. He presents historical examples of how economic thinking on monetary policymaking in the presence of uncertainty has evolved. Jefferson highlights the views of Milton Friedman, who emphasized the limited knowledge of policymakers and advocated for simple rules in monetary policy. He also discusses the Bayesian approach to uncertainty and the implications of ambiguity aversion. Jefferson emphasizes that the appropriate response to uncertainty depends on the specific circumstances. He discusses the lessons learned from the past, including the need for policymakers to act quickly or cautiously depending on the level of uncertainty, the limitations of rigid adherence to simple monetary policy rules, and the importance of humility in policymaking. He concludes by discussing the current economic situation, with a focus on inflation and economic growth.


Positivity Score: 75
Uncertainty Score: 80

Breeden - Modernising the trains and rails of UK payments

Amidst the prospect of significant technological change in payments, Sarah sets out how the Bank of England seeks to deliver trust and support innovation, both as a provider and as a regulator of retail and wholesale money. She discusses the first-order threats and opportunities facing central banks and the private sector.

In this speech, Sarah Breeden discusses the technological advancements in money and payment systems and how the Bank of England is looking to capture the benefits of these advances while ensuring safety. She highlights the potential of tokenization and distributed ledger technology in improving retail and wholesale payments, mentioning examples like Libra's proposal for cross-border payments and the potential for lower-cost micropayments. Breeden also emphasizes the importance of enhancing wholesale payments and settlement, particularly through innovative central bank infrastructure. Additionally, she discusses the exploration of retail central bank digital currency (CBDC) and encourages banks to take action in payments innovation.


Positivity: 85
Uncertainty: 70