Hi everybody, welcome to the July Monetary Policy Report press conference. With us today are Clare Lombardelli, Deputy Governor for Monetary Policy, Dave Ramsden, Deputy Governor for Markets and Banking, and the Governor, Andrew Bailey. Andrew will begin with opening remarks and then we'll turn to questions.
Well, thank you, Katie. The situation in the Middle East remains volatile. As a result, so do global energy prices. Oil prices in the five months since the conflict began have on average been almost 50% higher than in the months before it. And higher global energy prices will push up on inflation over the coming months. Set against that, the underlying disinflation of the UK economy has continued. Economic activity is subdued and the labor market is soft. There is little as yet to suggest that higher energy prices are becoming embedded in broad-based inflationary pressures in the UK economy, although we cannot draw too much comfort from that at this stage. Today we've kept bank rate at 3.75%. Monetary conditions have tightened for households and businesses since the conflict began. We see that, for example, in higher mortgage rates. And that tightening reflects the underlying economics. In particular, the expected increase in inflation from higher energy prices, which needs to be considered alongside whether the underlying disinflation in the domestic economy will continue. We will monitor the situation carefully and stand ready to adjust our stance as the evidence and our judgments on the outlook evolve. It is our job to ensure that inflation gets back to the 2% target and stays there. And that is what we will do.
So, I will now set out the outlook for inflation in further detail before turning to the projections and scenarios that have informed the Monetary Policy Committee's decision today. Chart one, although we seem to have chart two in front of us at the moment. Well, chart one, when it appears, I hope it will, shows how the near-term outlook for inflation has shifted in recent months as events in the Middle East have evolved. 12-month CPI inflation has fallen by 0.7 percentage points since March to 2.6% in the latest data for June. That is 0.4 percentage points—oh, here's chart one—lower than we expected in April's Monetary Policy Report. Inflation has been lower across a wide range of goods and services, not least food. The underlying disinflation process has been offset by higher energy prices following the conflict in the Middle East. Motor fuel prices are currently contributing 0.6 percentage points. In our latest near-term projection, that's the dashed blue line, higher energy prices push inflation up to a little above 3% by the end of the year. Energy prices remain highly volatile, however. The analysis in today's Monetary Policy Report is based on an average of energy futures prices over the 15 working days up to the 20th of July. And that's shown here in chart two. Over this period, front month Brent crude oil futures prices averaged $78 per barrel, which is below the $100 average ahead of the April report, but above the $64 average in the run-up to the February report. Within those 15 working days, the prices ranged from close to $70 a barrel while a ceasefire was in place to close to $90 a barrel after it had ended. And in the few days since the cutoff date for our projections, the Brent oil price has spiked to above $100 before falling back to around $84 earlier this week. As of this morning, it had gone back above $90.
So, these, of course, are all significant moves. And I would add a further word of caution. So-called crack spreads, the difference between the prices of refined petroleum products and Brent crude oil, have risen well above their pre-conflict levels, reflecting a fall in global refining output. And along with gas prices, it is the prices of these refined products, rather than the price of crude oil, that matter for domestic inflationary pressures. As chart three shows, crack spreads have fallen from recent peaks for jet fuel and diesel, but continued to rise for petrol. Given this volatility, the size and duration of the energy price shock is a key uncertainty for the outlook for UK inflation. A second key uncertainty is how the shock will transmit through the UK economy. We can already see the direct effect on the forecourts, and we expect Ofgem's price cap on household utility bills to rise further, to around £1,680 in the fourth quarter of this year. Though that is about £40 lower than it would have been without the temporary cut to value added tax on electricity bills announced by the government last week.
Over the coming months, we also expect to see the effects on consumer prices for businesses passing some of the higher energy costs they are now facing through the supply chain. Model evidence and intelligence from the bank's agents both suggest they will build more slowly than we expected in April, but we think these indirect effects will add nearly half a percentage point to inflation over the second half of the year. We have to watch very carefully that these direct and indirect effects do not lead to more persistent inflation through second round effects on domestic wage and price setting. Repeated inflationary episodes over the past five years have made households and businesses more attentive to inflation. Internet searches for inflation terms have spiked following the outbreak of conflict in the Gulf, for example, and remain well above historical norms as shown in chart four. And while they have fallen notably from recent peaks, inflation expectations remain elevated. Reassuringly, there are few signs so far that second round effects are generating more broad-based inflationary pressures. I'll make three observations about this.
First, the process of underlying disinflation in the UK economy has continued. We can see this in chart five, which shows how services inflation fell from 4.5% in March to 3.6% in June, and now underlying services inflation measures have fallen to below 4%. Although still somewhat above estimates of target consistent levels, these falls point to a broader slowing in domestic inflationary pressures. The second observation is that the backdrop of relatively weak household demand reduces the ability of firms to pass through cost increases to consumer prices. As chart six here shows, underlying GDP growth is projected to weaken slightly further in the near term as the effects of the conflict weigh further on demand. Contacts with the bank's agents point to weak demand limiting pass-through of cost increases to prices. Consistent with this, two-thirds of firms in the bank's decision-maker panel are expecting higher energy to result in reduced margins. And firms do not seem to expect to raise prices more than the increase in their costs.
The third observation I'll make is that spare capacity in the labor market is likely to reduce workers' ability to secure higher nominal wage growth in response to higher inflation. As chart seven shows, private sector regular wage growth eased to 2.9% in the three months to May, and we expect it to remain around that level throughout the current quarter. Other measures of pay growth remain higher at around 4%, but have fallen gradually over recent months. The bank's agents continue to report average pay settlements of 3.5% for 2026, below the average settlement of 4.0% last year, citing lower looser labor market conditions. In the three months to July, firms in the decision-maker panel expected average wage growth of 3.4% one year ahead, a little below expectations before the conflict. But a lack of evidence so far does not rule out that wage and price setting could generate second-round effects in the future, especially if energy prices remain elevated. As firms tend to make wage settlements by the second quarter of the year, for example, the impact on wage growth may only emerge well into next year. So, while it is reassuring that indicators of second-round effects remain benign, the overall assessment is necessarily at this stage tentative.
And given the uncertainty, monetary policy needs to balance the costs of leaning too little against potential inflationary pressures and the cost of responding too much. How much policy needs to lean against inflation and the level of bank rate needed to achieve that will depend on how the outlook evolves. To inform its policy deliberations and explore the outlook, the MPC has considered a central projection in two scenarios. These projections are neither all-encompassing nor do they reflect the full distribution of risks. But they reflect key sources of continued uncertainty around the future paths of global energy prices and the strength of second-round effects.
Chart eight shows the assumed paths for oil and gas prices in each of these projections. The central projection is conditioned on wholesale energy prices evolving in line with gas and oil futures curves in the 15 working days to the 20th of July. Oil prices peak at just above $100 per barrel before gradually declining to around $71. Gas prices peak at a little over 120p per therm before gradually declining to a little under 60p. Second-round effects are assumed to be moderate. In the milder scenario, energy prices follow a lower path calibrated for the futures curves around the beginning of July, shortly after a ceasefire was announced. There are no new second-round effects in this scenario. It represents a version of the future where a ceasefire agreement is fully implemented and energy price volatility is lower.
In the adverse scenario, by contrast, the conflict continues perhaps in an episodic manner and with no clear resolution, so that energy prices rise materially above the path in the central projection and remain above it. While inflation expectations drift higher, leading to stronger second-round effects. Chart nine here shows the paths for inflation and the output gap in the three projections, conditional on the market curve for interest rates based on an average of forward interest rates in the 15 working days to the 20th of July. In the central projection, inflation is projected to fall from its near-term peak over next year as the effects of higher energy prices fade and be slightly under the 2% target in the medium-term as energy prices fall back and the direct effects of energy prices turn negative. In the milder scenario, the path for inflation is lower throughout, while inflation rises significantly and persistently in the adverse scenario.
These paths illustrate that if the assumptions underlying any particular projection or scenario come to pass, the appropriate stance of policy would likely vary from the market path on which they're conditioned. If the conflict in the Middle East persists for an extended period, for example, and we begin to see signs of second-round effects, it's likely that we will have to tighten policy to counter inflationary pressures in the UK economy. Similarly, if the conflict is credibly resolved in the coming months, the paths would point to a looser policy stance than implied by the market curve. But we do not know how the future will play out, or indeed if it will play out in a way that resembles any of these projections and scenarios. And that's because the situation in the Middle East is highly uncertain. We have to set policy now, seeing through the day-to-day volatility and weighing all the risks and uncertainties we face.
Current market pricing for future interest rates similarly places weight on and averages across a range of outcomes for energy prices and second-round effects. As chart 10 shows, model-based estimates suggest that the upward slope in the market curve reflects risk premia rather than expectations of future levels of bank rate. Similarly, median expectations in the bank's market participant survey are for bank rate to remain unchanged over the year ahead before declining further out. There's no contradiction in this. Market participants find it most likely that bank rate will remain at its current level throughout this year, while investors, quite reasonably, require a premium to compensate for the risk that bank rate may have to go up should inflationary pressure from the energy shock prove more persistent. That seems a reasonable position for now. The resulting upward slope in the interest rate curve is directly tightening monetary conditions for businesses and households, including through higher mortgage rates.
When it comes to bank rate, the MPC will set monetary policy as appropriate given the evolution of the economy, balancing all the risks to the outlook for inflation in order to achieve the 2% target sustainably. And it's in that light that a majority of the MPC voted to hold bank rate today at 3.75%. So, with that, Dave Ramsden and I will be happy to take your questions. Thank you.
Should we do Mehreen and then Ed?
Hello. Mehreen Khan from The Times. Governor, for the last couple of months you've told us that the market's been doing a bit of work for you with financial tightening. And that's given you time to wait and see about the evolution of oil prices. Your colleague at the Fed made some similar comments, but they weren't taken so well because at some point you have to sort of validate where the market is. Are you ready to give them that validation, which is eventually there will be demand to tighten, or actually are you more comfortable if some of that financial tightening disappears because the conditions in the domestic economy at least would give you breathing space on the opposite side?
Well, I'm not going to comment on the situation in the US. That's obviously for the Federal Reserve and for Kevin Warsh. What I would say is this, and it just really repeats what I just said. I think that the situation we see with the market curve is entirely consistent with our reading of the economy. So, you know, when you say the market's doing the work, I think actually, you know, it's a reflection of the economy. The market is reflecting that. Our views I think are consistent with that. You know, it is consistent with the central view in the market that rates will stay unchanged this year, but there is a distribution of risk which puts it on the upside. And you know, one way of illustrating this is these three scenarios that we've got and particularly the central one. Look, I would caution somewhat that the world is so uncertain at the moment that the probabilities you would attach to those scenarios and particularly the central one is lower than usual. But if you look at the distribution of those scenarios, you can see the similar pattern that the upside scenario is further from the central scenario than the downside scenarios, and I think that's a reasonable illustration of the economics.
Hi, Ed Conway from Sky News. Only kind of three months ago the world felt very scary and a lot of people expected that the Bank of England at this point was going to be raising interest rates. I mean, you said a bit about the kind of change in the background that's helped contribute to leaving rates on hold. I just wanted, you know, does the world feel less scary now than it did three months ago? And also, what would it take you—what are you looking for to make you actually act?
So, I mean, I'm sure Clare will want to come on this. Let me kick off briefly. I mean, the world feels—particularly I would say the situation in the Gulf and the Middle East—feels as uncertain and volatile today as it did then. I think it's the right—I mean, you can see it if you compare our upside scenario today to the scenario you saw that we had back in April, you'll see it has a different profile. It's got a lower peak, but it's persistent. And I think that reflects my sort of, you know, my thinking such as it is about how this conflict plays out. In a sense that we're faced—I do think there are points of resistance in this process, if you—I'm talking sort of broad geopolitical terms now, that set in when oil prices have gone high, particularly well above, you know, when they get above 100. But as we've seen, and we highlighted in describing the window, you know, with the window that the normal window that we've had both the sort of the ceasefire period and the breakdown of the ceasefire period. So you know, the way I look at the upside scenario today, it's a more persistent missiles get fired period. We don't know what ends it because we don't properly understand really what's going on there at the moment. So that's my sort of evolution of my thinking there. Now I think the last thing I'd say, coming back to what I said earlier, is however I do think that we've seen more evidence that indicates that the disinflation process is in place. Yeah, CPI is under—today the latest number is under where we thought it would be back in April. That's obviously encouraging but the big question there is is this going to carry forward to the period when the second round effects from the energy price—now it's coming through. But Claire did you want to...
Yeah, I mean what I would add to that is as you say we've learned quite a lot since the last time we were sat here doing a press conference and you can see how that has evolved in through the scenarios that we've done where we've learned, you know, if you sort of cast your mind back to then it was unclear how long this would go on for. There were worlds in which actually this could escalate through energy prices quite quickly but also end quite quickly. Sadly we've not seen that resolution. We've learned that this could go on for a lot longer. We've also learned that some of those very extreme energy prices that felt possible then, you know, haven't come to pass and are unlikely to come to pass which is why we've adjusted the scenarios to reflect that learning over the last three months.
And just to build on what Claire says in terms and Andrew says in terms of the learning, I think the adverse scenario we've got is if you like a continuation of this episodic nature of the conflict, which gives you more persistent higher energy prices. And the learning I would argue—we use this language, I think—means that that upside scenario, that adverse scenario, is a plausible possible future. Equally, we've had more evidence as both Claire and Andrew were saying on the underlying disinflation process continuing. And you know, were the balance of risks to change—and Andrew's been very clear, I think we've been very clear on that—we see the balance of risks on inflation tilted to the upside. But—and that's coming from global factors—were that to change, then you've got more chance of the milder scenario playing out. But that's not where we think the balance of risks is at present.
Thanks, Governor. Faisal Islam, BBC News. So, I mean, just to clarify, you—I think you did say this in terms that if the conflict persists at the current clip, essentially a rate rise is on the cards. But if the sorts of de-escalation that sort of tentatively appeared about a month ago—if that persists, then you could even cut. I mean, that does seem so dependent now on what happens geopolitically well beyond even your powers, Governor. And then secondly, are you surprised by the resilience of the UK economy? You know, there's a little bit of a bump up in growth and there seems—there's been some more positive numbers over the past couple of weeks.
Well, I think you see—Faisal, it's interesting when you said at the current level of the conflict because, you know, you even look at the last week, we've had—we had a period last week where it looked like there was some settlement and some reduction in activity and then it's come back again. So I think when we talk about the current level, that's obviously a slightly hazardous comment. So, there is huge uncertainty there. And as you rightly say, that is very important. Just to reiterate, I think there are two lenses, if you like. One is that, and the other is then how it's reflected through into the UK economy in this picture I think I described where, you know, we are seeing the disinflation process continue. As I described, there's quite a lot of evidence that's coming our way that, you know, for instance, margins are taking more of the cost pressure. But it has—there's an awful lot of distance to travel on that story, and we need to see how it evolves.
Tom Rees from Bloomberg News. Claire, of the people who voted to hold rates today, I thought you sounded the most cautious. Was it a close call over whether to hold or hike today, and you know, how much longer do you feel that you can wait before acting on rates?
Sure, it wasn't a close judgment for me. I think it's pretty clear, and I was pretty clear that holding rates at their current level was the right thing to do. I think basically you've got these sort of two opposing factors. We have had more evidence on disinflation. I've sort of learned quite a lot about the security of that disinflation process prior to the war, but obviously there are a range of other things that have, you know, factored in. The conflict itself obviously raising inflationary pressures, you know, other risks around that. So, you know, you've got these two effects happening at the moment. We have got some restriction in the economy now. I think the thing that will—the thing that we are watching, the thing that matters is actually this: what will this do for second-round effects? How will these increases in inflation feed to the direct and indirect effects that we know are coming? We know inflation is going to go up later this year. We certainly expect it to because of the indirect effects. It's how that plays through into wider inflationary pressures and it's that assessment of a whole range of data and we've set out a lot of the things that we're looking at and monitoring and it's about those pieces of data and how they all interact with each other that will form the judgment on where rates need to go.
Thanks. Tim Wallace at the Daily Telegraph. Governor, can you expand on the risks to the outlook for food prices, please? So there's the wildfires going on. The MPR mentions El Nino and some of the disruptions from the Middle East. What are you looking at when it comes to the impact on food prices, living costs, the wider economy and monetary policy from those factors?
Well, first thing to say is that the information we've received in this round on the likely increase in food prices through the rest of this year would indicate that it'll be lower than we thought it would be. And that's a mixture of information we get from our agents, information we get from surveys. And obviously that's encouraging. So let's start there as it were. Now, you're right to say that there are quite a few risks around it. I think you probably named most of them, but I'll say a little bit more. So first obviously there is the effect of the pass-through of energy prices themselves. I think one of the things that I was struck by four years ago was the size of the energy content in processed food costs. It is probably larger than many people—I put my hand up here—would predict it to be if you were asked to guess it without knowing the answer to the question. So that's obviously highly relevant. Then as you said, you know, we don't for a moment pretend to be experts on this subject, but we can observe the reporting that there is a build-up of what looks to be a large El Nino system in the Pacific Ocean off the coast of Latin America. And we know from past experience that that does have effects on the world climate to come. So, we'll have to watch that one very carefully. I won't put it more than that at this stage because obviously it's uncertain and as I say it's not our area of expertise. So there are a number of issues at play here in terms of risks.
And just to build on that, one thing we've also emphasized is how these shocks could interact. You know, El Nino plus, you know, where there are problems with supply chains, perhaps linked to a re-escalation of the conflict, we flag in Box E how, because of El Nino, there were challenges with getting through the Panama Canal. And again, as Andrew says, we're not experts in supply chains or in climate, but we do think that these could have consequences for global prices, which is why we see the risks tilted to the upside on inflation relative to our central projection.
Straight in the middle here. And then Philip.
You should ask the New York Times. So, you've talked about this underlying disinflation still continuing in the background and assuming, you know, relatively soon resolution to the conflict that maybe returning as the dominant factor. But just in terms of economic activity, do you see—can you just kind of talk about what you see as being the underlying trend there, whether an end to the conflict could see that speeding up, or is that weakness in demand continuing? And then, I'm not going to ask you to comment on what Governor Broadbent said yesterday, but I do wonder if you feel that the refusal to give any forward guidance leads to volatility in Treasury markets that then can impact the gilt market, if you have any sense of that spilling over more globally?
Well, I'll do the second bit, and then I think Claire will come in on your first question. I mean, look, I think if you look at the gilt markets, you look at government bond markets generally, I think over recent months, by far the biggest influence on volatility in gilt markets has been the fluctuating events in the Middle East. There's no question that that's the biggest and dominant cause of fluctuations. I mean, we've obviously followed—we follow it very closely, and you can see it. I mean, you can see it very much in real time.
Yeah, on activity, I mean, look, activity at the moment is—we judge it to be relatively weak. So, it was about 0.1% growth in the last quarter. That's obviously below what we would expect supply to be. So, you've got weakness there. I mean, we do—in our central projection, and as Andrew said, I wouldn't put too much weight on it, but we do have that weakening slightly further. And we've been expecting that for some time. I mean, as we've heard, the economy has proved more resilient than in lots of expectations formed, and actually we've recently—more recently had positive data around consumer confidence, retail sales, the PMI, most recent PMIs, those sorts of things. So, you know, we are obviously keeping an eye on activity. It has proved to be a bit more resilient than we might have expected, but underlying the trend is one of relative weakness.
Philip. And then, Delphine.
Hi, Philip Inman from The Guardian. One of the frustrating aspects of this press conference is we don't have any of the people who voted for a rate rise on the panel. Given that, could you explain a bit more about why you think they would believe that it's almost baked in that there are second round effects coming and that's why they voted for a rate rise?
Well, you've got their paragraphs. One of the things that we've obviously changed in recent times is to introduce these individual paragraphs, so you can see that view set out there. If I can speak for them for a moment, I think you'll see a difference of view in terms of concerns about the second round effects. You can put different weightings on these scenarios as we said. Claire just said it again, quite rightly. Frankly, we are all of us less sure about the weightings to put on these scenarios because of the volatility in the Gulf particularly than we would normally be when we have scenarios in front of us. So that's very fair. And then I think, to speak for my colleagues, I think there are some differences of view around whether, given all of that and if given the distribution of risks, whether it's better to act sooner or to see how this evolves. And that's reasonable. Reasonable people can disagree. That's a sort of monetary strategy point, really. I think we are in a position where we can sensibly wait to see how this evolves, but I absolutely respect colleagues who take a different view on that.
Can I just add something and just on your point, Philip, because these press conferences are always about the decision. And
And you know, we as you know, almost every decision at the moment, there's a split vote. But the press conference is about the decision we've made today. And as Andrew says, the paragraphs set out in quite a lot of detail the range of views, but I think it's very important that the focus here is on the decision.
Thanks. You've flagged up that it will take quite some time before second round effects can be observed, although they are the crucial part. Would you wait to make any move until you're able to observe those, or would you potentially react on the back of movements in energy prices before we get to see those wage settlements coming through?
Well, my own view on that is, I think to sort of develop your point, that second round effects emerge over quite a long period of time, because obviously that's consistent with the transmission mechanism of monetary policy that we've explained and written quite a lot about and spoken quite a lot about. So, I think you look, I'd only go so far as to say that I don't think it would be wise to wait for all of the second round effects to emerge, because I think in most situations, if not all, it would be too late by that stage. But that doesn't I know help with the sort of the underlying question you're asking, which is, so at what point would you therefore act? That's all that we would say, you wouldn't wait till the end. I think we just have to judge that by the situation we're in.
And we have set out a monitoring framework in box A to try and help frame this to exactly deal with the challenges that Andrew's just flagged, and we've given our assessment as of now in box B. So, we're trying to be as transparent as we can about how these will feed back to inform our judgments and our decisions. There's no single measure that will give you the single answer.
Ritika Gupta, CNBC. Governor, I wanted to get your thoughts around QT. You know that the final decision is coming in September and you've given some analysis of the impact of the balance sheet one-off being modest. But I wanted to get your thoughts on the kind of conditions that would make you hesitant to continue with QT in the future.
Well, I can tell you one thing with absolute certainty, there'll be a decision in September as there always is and we will announce it and it will be transparent. And as we always say, you know, and we've laid them out again, there are the principles that we operate under and market conditions obviously form an important part of that judgment. So, we will, you know, behave as we always do in that respect.
Hi, Patrick Tooher from the Daily Mail. Just a quick follow-up on that. Have you any plans to reduce the interest rate that you charge on banks' reserves held with you as a result of...
Well, the interest rate on reserves is a key anchor for the monetary transmission process because, you know, when we announce a decision like the decision we announced today on bank rates, you can well ask, 'Well, what does that mean?' It means exactly that. It's the rate we charge on reserves of accounts that the banks have to hold at the Bank of England and then that transmits out into the economy. So, you know, our absolute focus is that we need that rate to be aligned with the decision of the MPC to make that transmission process work. So, that's a slightly longer way of saying, 'No, that's not an issue that we've reflected on.'
Thank you. David Milliken from Reuters. One thing I did want to ask is whether what the Bank of England does in rates is affected at all by what the Fed or the ECB does, whether it becomes harder for the Bank of England to keep interest rates on hold if the Fed potentially raises rates, if the ECB continues to raise rates further. And just returning to this issue of QT, I'm not expecting the Bank to announce a decision today, but I did notice that in the box you did have a slightly higher estimate of what you think the impact of QT on gilt yields has. I just wanted to get a sense of whether that upward revision is the type of thing that has much bearing on a decision in September, or whether it's just a relatively small change, especially given that I think the Bank's last survey of market participants shows a lot of people in markets do expect the Bank to slow the pace over the next 12 months.
Right, I'll take the first part. Dave may want to say something on the second part of your question. Well, all of us as central banks obviously set monetary policy for our own domestic economy and our own domestic inflation situation. Now, the UK's an open economy, so obviously we look at world conditions and of course, in some ways never more so at the moment given what's going on in the wider world and particularly the conflicts in the Gulf. So, the world economy enters that way. But ultimately we all set the level of our official interest rate to match the situation in our domestic economy and so we don't say what have the Fed done and what have the ECB done and what should we do. But we are looking at obviously the state of the world economy, the state of the economy of our trading partners and feeding that back through into the assessment system we have. Dave, do you want to?
Yeah, and just to recap on the analysis we published today in box G, and I mean the story so far on QT, the stock of assets peaked at 895 billion in terms of the stock of assets for monetary policy purposes. That was right at the start of 2022. Four and a half years on, we're down at 491 billion. So, that's a 400 billion fall. So, that's the scale of QT over that period. 10-year gilt yields have risen by about 350 basis points. And we think about 200 basis points of that was driven by term premium. So, that's your context. And then within that, our latest estimates are the impact of QT, which remember is over that period, is about 20 to 30 basis points. That's up from what we published last year with 15 to 25 basis points. But these are very small incremental increases against that backdrop. And, you know, suggest that QT is driving a very small fraction between a tenth and a sixth of that total change in term premium, which is, as Andrew was emphasizing earlier, entirely consistent with our principles that bank rate is our primary tool and QT is operating in the background and is well understood.
