A leading Bank of England policymaker warned on Thursday that a rise in interest rates risked undermining th erecovery and the cost of credit should remain low until living standards begin to rise.
Paul Fisher, a member of the central bank’s monetary policy committee (MPC), joined Threadneedle Street’s verbal offensive to protect low rates after official figures revealed a dramatic fall in the unemployment rate to 7.1% in November.
Fisher said the central bank was likely to keep rates low despite unemployment nearing a threshold of 7% because unemployment was still “elevated”.
The BoE introduced a policy of forward guidance last year that tied a review of its interest rate policy to a fall in unemployment to 7%. At the time unemployment was 7.8% of the workforce and officials expected the target to be reached in 2016.