The Bank of England will be in no hurry to raise interest rates even when unemployment falls to the 7 percent level it has set as a threshold to consider tightening monetary policy, Governor Mark Carney said on Tuesday.
“Seven percent is a threshold, not a trigger,” he told parliament’s Treasury Committee.
Carney, responding to a question from one of the lawmakers, said it was a “total failure of logic” to suggest that the BoE’s new policy of forward guidance was dead on arrival.
The BoE took a new approach to nursing the economy back to health in August when it said it would not consider raising record-low interest rates until Britain’s unemployment rate fell to 7 percent.
Since then, unemployment has come down faster than the BoE had expected – it hit 7.6 percent in the three months to September – raising questions about the duration of its interest rate pledge.
Half of economists polled by Reuters have said policymakers’ handling of forward guidance has damaged the credibility of the bank.
via Reuters 
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