BoE Carney Modifies Policy to Take In Unemployment and Recovery

Bank of England governor Mark Carney has overhauled the Bank’s interest rate policy to reflect falling unemployment and the economic recovery.

He said the Bank’s forward guidance policy “is working” and had helped to secure growth.

The Bank’s rate policy will now be determined not just by unemployment, but by a wider range of indicators.

But Mr Carney warned the recovery was not secure and that when rates rose, they would do so only “gradually”.

However, investors took this as an indication that rates could rise next year, sending the pound higher on the money markets.

Introducing the Bank’s forward guidance policy last August, Mr Carney said that the Bank would not consider raising interest rates from their current low of 0.5% until unemployment had fallen to 7% or below.

He said the policy had reduced uncertainty and encouraged businesses to hire and spend.

via BBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza