David Ramsden: The monetary policy toolbox in the UK

Speech by Sir David Ramsden, Deputy Governor for Markets and Banking of the Bank of England, to the Society of Professional Economists, virtual, 21 October 2020.

The views expressed in this speech are those of the speaker and not the view of the BIS.

1. Introduction

It's a pleasure to be speaking once again at the Society of Professional Economists' Annual Conference. When I last addressed this conference it was two years ago, in person, in the impressive surroundings of the Bloomberg building near to the Bank of England. Today we're meeting in rather different circumstances, and for many of us at least in slightly less impressive surroundings! I'm delighted that we are able to meet virtually, and I'd like to thank Kevin Daly and all the SPE team for their work to make this event possible.

The theme of today's conference is "Policy Challenges for the Global Economy". What I want to do as my contribution to that theme is to give you my perspective, in my role as Deputy Governor for Markets, Banking and Resolution at the Bank of England and member of the UK's Monetary Policy Committee (the MPC), on one part of our response to the particular policy challenges of the Covid pandemic. And I will frame my contribution in terms of the use the MPC has made of what has come to be known as the "monetary policy toolbox": the range of policy tools that MPC has used so far, what tools are available to us now, and which ones we might decide to use in the near future.

The idea of a range of monetary policy tools is itself quite a new one. For many years monetary policy makers used one tool, the policy rate, to achieve their goal - in the UK case, that meant Bank Rate. And the Bank used a small, focused set of central balance sheet operations to keep money market rates, and so rates in the wider economy, close to that policy rate.