Bank Of England: Current Monetary Policy – Opening Remarks By Jonathan Haskel - Given At An Event For The Book “Restarting The Future” By Jonathan Haskel And Stian Westlake, Hosted By The Society Of Professional Economists,

Thank you for inviting us here today to talk about our recent book.

Our book is about how well institutions are suited to a more “intangible” economy. The events of the last two weeks have underlined just how important institutions are. So before we get into the book let me reflect on some of those events.

First, financial markets. As my colleague Huw Pill, the Chief Economist at the Bank has said, you should expect re-pricing of financial assets in response to the changing macro outlook. As we have recovered from Covid, UK 10-year gilt yields have risen by around 250 basis points since the start of the year until 22 September: the trend in US and Euro Area yields was broadly similar.

However, in the days following HM Treasury’s fiscal event on Friday 23 September, there was a significant divergence between government bond yields in the UK and in other countries. Between close of business on Thursday 22 September (the day before the fiscal event) and close of business on Tuesday 27 September (the day before the Bank’s market intervention), US and German 30 year government bond yields increased by around 20 basis points. By contrast, UK 30-year gilts rose by 120 basis points.

Echoing what Huw said, the data show there was undoubtedly a UK-specific factor in these changes.

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