1.How do central bank decisions influence the financial decisions of households and businesses, and ultimately their everyday lives?

Central bank decisions matter hugely because they sit at the heart of the system of money in an economy.      

Monetary policy is perhaps the most direct example of this, where the interest rates we set feed through into the price of products offered by commercial banks to households and businesses. This impacts what households pay on mortgages and what they earn on savings; as well as the cost of businesses financing capital and therefore decisions on investment, hiring and prices. Those choices then feed through to growth and jobs.

Financial stability policy is also, of course, crucial for the economy. Without a stable financial system we cannot hope to produce sustainable growth. As we saw in the aftermath of the global financial crisis, a lack of financial stability means households and businesses cannot rely on funding being available when they need it, which impacts investment decisions. If confidence is shaken in deposit takers, the funds that are intermediated through the banking system into loans that drive growth may be relocated elsewhere.

And, increasingly, central banks play a key role in facilitating the movement of money around the economy. As well as providing trustworthy, secure physical currency, central banks are at the heart of innovation in digital payments systems – helping create more flexible, faster and cheaper ways to move money within countries and across borders.

All of these functions are critical to a well-functioning and vibrant economy.

2. As the National Bank of the Republic of North Macedonia marks 80 years of central banking, what is the most important role of central banks in maintaining trust and stability in today’s uncertain environment?

First, may I offer my congratulations to the National Bank of the Republic of North Macedonia on its 80th anniversary. Anniversaries like this are a reminder that central banking is ultimately about public trust, something that can only be earned over time and that is tested most in difficult moments.

At its core, a central bank’s role is to safeguard the value of money. People need confidence that money will retain its assured value, and that it can be used safely and efficiently for everyday transactions. That is why we set policy to maintain financial stability, so that the nominal value of money is protected; and why we set monetary policy in pursuit of price stability, so that real incomes are not eroded and businesses can invest with confidence.

A clear mandate, operational independence, and transparent accountability help central banks make the decisions needed to meet their objectives, even when those decisions are not easy in the short term.

In my view, this anchor - the value of money - provides the most coherent way to explain why central bank independence matters, and why it must be protected.

3. How did the Bank of England navigate the latest inflationary episode? Are central banks ready to withstand a more volatile world?

Recent experience in the UK has been shaped to a significant degree by large external shocks, especially to energy and supply chains. Sadly, these episodes are symptomatic of a world that is increasingly volatile, uncertain, complex and ambiguous.

The immediate effects of such shocks tend to be visible quickest in the most salient prices faced by households, namely food and fuel costs. But broader and more persistent risks crystallise if higher costs feed into other prices and wages, and if inflation expectations drift upwards.

The task for monetary policy is therefore to assess not just the direct impacts of a shock, but the likely persistence of those forces. Only then can we act so that inflation returns sustainably to target, while recognising that policy works with lags and that not every shock should be met in the same way.

In navigating the most recent shock, a key focus for the Bank of England’s Monetary Policy Committee has been guarding against second-round effects and keeping inflation expectations anchored. That requires decisions grounded in a wide range of evidence, not a single indicator: accounting for inflation and wages, demand and capacity, survey measures and agents’ intelligence, and measures of financial conditions. It also requires clear communication about the uncertainties and the trade offs. In recent times we have placed greater emphasis on complementing the baseline forecast with scenarios and risk analysis, precisely because uncertainty and volatility have become more prominent features of the environment.

Are central banks ready for a more volatile world? We have certainly learned a great deal. Our approach to monetary policy has evolved as described above, and we benefit from a more resilient financial system that should buffer, rather than amplify, shocks. But readiness depends on continuously improving analysis, stress testing our thinking against a wider range of scenarios, and maintaining trust and legitimacy.

This last element is critical: our ability to do our job depends on holding firmly to the anchor of trust in the value of money and in the institutions charged with preserving it.