Belfast Telegraph

IMF backs governor's policy over interest

By russell lynch

Mark Carney's flagship forward guidance policy has been backed by the International Monetary Fund as the Bank of England Governor marked 100 days at the helm in Threadneedle Street.

The IMF's latest World Economic Outlook, which raised UK growth forecasts sharply from 0.9% to 1.4% for this year, said the Bank's recently adopted framework "is an important step toward greater transparency about the factors that will guide policy rates".

Under the regime, the bank's monetary policy committee will not consider raising interest rates from their current 0.5% record low until the jobless rate falls to 7%, subject to caveats on inflation and financial stability.

Rate-setters have been on a drive to clarify the policy amid initial scepticism from financial markets which believe unemployment will fall more quickly to 7% than the Bank's forecasts of mid-2016.

The IMF said UK monetary policy should "remain accommodative" as the economy is still 3.3% below the high-water mark in the first quarter of 2008, according to the Office for National Statistics.

Belfast Telegraph