UK Holds Interest Rates Until Unemployment Hits 7 Percent

Bank of England governor Mark Carney has said the Bank will not consider raising interest rates until the jobless rate has fallen to 7% or below.

Mr Carney said he expected this would require the creation of about 750,000 jobs and could take three years.

The UK unemployment rate currently stands at 7.8%.

The governor said this extra clarity was needed to avoid unnecessary fears that interest rates would rise after recent positive economic news.

Mr Carney said that the 7% unemployment figure was not a target, but a point at which the Bank of England would re-examine interest rates. The unemployment threshold will hold unless inflation levels threaten to rise too fast or it poses a significant threat to financial stability.

Mr Carney said that until the threshold was reached the Bank would not cut back on its £375bn asset purchase programme, known as quantitative easing (QE).

The move sees the Bank of England joining both the US Federal Reserve and the European Central Bank in providing so-called “forward guidance” on interest rate policies.

via BBC

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