Belfast Telegraph

Wednesday 23 July 2014

Mark Carney to rethink guidance on interest rates

There has been speculation that Bank of England governor Mark Carney will change the threshold for considering a rise in interest rates
There has been speculation that Bank of England governor Mark Carney will change the threshold for considering a rise in interest rates

The Bank of England has kept interest rates on hold at a record low of 0.5%.

The Bank pledged last year not to consider a rise until the unemployment rate falls to 7%, as part of efforts to support the UK's recovery.

Rates have stayed at the rock bottom level of 0.5% since March 2009, while the Bank has also pumped £375bn into the economy under its quantitative easing programme to spur on growth.

But the strength of the economic revival in recent months has led to widespread speculation the Bank will have to tweak its forward guidance to stave off a rate hike. Economists predict Bank governor Mark Carney will lower the unemployment target for considering a hike in the cost of borrowing as early as next month.

When he announced the new forward guidance policy on rates, the Bank predicted unemployment would not fall to 7% until 2016. But unemployment has been falling faster than expected – down to 7.4% in October – as the recovery gains traction, so the threshold could be hit far sooner.

COMMENT RULES: Comments that are judged to be defamatory, abusive or in bad taste are not acceptable and contributors who consistently fall below certain criteria will be permanently blacklisted. The moderator will not enter into debate with individual contributors and the moderator’s decision is final. It is Belfast Telegraph policy to close comments on court cases, tribunals and active legal investigations. We may also close comments on articles which are being targeted for abuse. Problems with commenting? customercare@belfasttelegraph.co.uk