Carney Says BOE Policy `Needs to Walk, Not Run, to Stand Still'

The video tutorial explains the concept of the equilibrium interest rate, which maintains output at potential and inflation at target. It discusses how the equilibrium rate is influenced by structural factors like productivity and demographics, as well as short-term forces such as uncertainty. The tutorial also evaluates the recent stance of monetary policy, noting that despite low Bank rates, the policy has been mildly accommodative. It concludes with guidance on future rate rises, emphasizing that they will be limited and gradual due to persistent structural factors and slowly fading short-term headwinds.

What is the equilibrium interest rate and how does it relate to the economy's output gap?

What factors have contributed to the decline in the equilibrium interest rate since the pre-crisis levels?

How does the stance of monetary policy relate to the current economic conditions, such as employment and inflation?

What does the Monetary Policy Committee (MPC) suggest about the future of interest rate rises?

In what ways do structural and short-term factors influence the equilibrium interest rate?