U.K. Economy Appearing to be Gaining Momentum

U.K. unemployment will hit Mark Carney’s 7 percent threshold faster than the Bank of England forecasts, prompting policy makers to assess whether they need to raise their benchmark interest rate, economists said.

Seventeen of 25 forecasters in a Bloomberg News survey see unemployment falling to the level by mid-2016, with 13 predicting it will happen in 2015 at the latest. The BOE sees it staying above the threshold until at least the fourth quarter of 2016. Data tomorrow will show the rate stayed at 7.8 percent in the second quarter, according to a separate poll.

The BOE introduced guidance last week and said it plans to keep its key rate at a record-low 0.5 percent until the jobless rate falls to 7 percent. Former U.K. policy maker Charles Goodhart said the central bank will probably need to tighten policy before the implied timeframe, and that the strength of the recovery is “probably somewhat underestimated.”


This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.