BOE Holds Policy as Debate Continues

Bank of England Governor Mark Carney and his colleagues are debating how they can reflect the strength of the U.K. economy in their forecasts without suggesting that interest rates are about to go up.

Officials are compiling a new quarterly economic outlook, due to be published next week, and reviewing how to guide expectations after unemployment plunged to within a whisker of the threshold for considering an interest-rate increase. Carney says he’s in no rush to end emergency stimulus, and the Monetary Policy Committee kept the benchmark rate at 0.5 percent today.

Carney faces the biggest test of his credibility since unveiling the flagship policy six months ago as he seeks to convince households and businesses that the economy has enough spare capacity to extend almost five years of record-low borrowing costs. Officials stress that Britain faces risks from a euro-area economy struggling to gain traction and from emerging-market turmoil.

Bloomberg

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