David Ramsden: Surveys, forecasts and scenarios - setting UK monetary policy under uncertainty

Speech by Sir David Ramsden, Deputy Governor for Markets and Banking of the Bank of England, at the Bureau for Economic Research, Stellenbosch University, Stellenbosch, 28 February 2025.

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

Thank you for the invitation to speak at Stellenbosch University today. I'm visiting South Africa in my capacity as a Deputy Governor of the Bank of England, attending the bi-monthly meetings of the Bank for International Settlements, starting later today in Cape Town. This morning I'm speaking as one of nine members of the Bank's Monetary Policy Committee (MPC), which has responsibility for setting monetary policy in the UK, with the primary objective of keeping UK inflation at 2% sustainably over the medium term.

In my speech today I want to set out how my views on monetary policy in the UK have evolved over recent months in response to my changing assessment of the outlook for the economy. That could sound like a relatively narrow focus but I hope my focus on the challenge of setting monetary policy against a back-drop of heightened uncertainties is of wider relevance.

Uncertainty is going to be a recurring theme of my speech. There are three dimensions that I'm going to bring out. The majority of my speech is going to be devoted to the prevailing uncertainty about the state of the UK economy; in particular the state of the UK labour market and the persistence of inflationary pressures. Most economies face some of the same uncertainties given the huge shocks that have hit the global economy but the UK is experiencing more than most.

The second aspect of uncertainty is about global developments, whether that be geopolitics or trade and financial fragmentation. The UK is a relatively small open economy so these matter and I will return to this aspect towards the end of my speech.

The third dimension is the impact domestic and global uncertainty has on the actions of businesses and consumers and what that means for the outlook for the economy.