News — Bank of England

Bank of England downgrades unemployment threshold

Bank of England Forward guidance Mark Carney Monetary Policy Unemployment threshold

The Bank of England has updated its forward guidance policy (12 February 2014) in the light of the December unemployment figures, which showed a sharp drop to 7.1% - just short of 7% unemployment threshold set n August. Despite the unexpected fall in the unemployment figures, the Bank estimates that there is still sufficient slack in the economy to keep interest rates at 0.5%.

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House prices up by 8.4%

Bank of England Housing market

The last time I wrote about the UK housing market, back in 2012, average prices had fallen for three out of the previous four quarters, and confidence in the market had hit rock bottom. Indeed, the last time house prices rose consistently for all four quarters was back in 2007 – just before the bubble burst. When it did burst, most analysts agreed that, whatever the causes, the housing market needed to go through a substantial re-adjustment, given the bubble had pushed up house prices to unsustainable levels, with affordability falling to an all-time low. Between 2007 and 2013, the...

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GDP forecasts

Bank of England GDP George Osborne

As 2013 draws to a close, can we look forward to a more prosperous New Year? This time last year the talk was of an historic triple-dip recession. That did not happen and virtually all current indicators provide a more positive outlook for 2014. The easiest job at the moment must be George Osborne’s script-writer ‘..unemployment down, employment up, inflation down, confidence up, a recovery in the housing market..’ just for starters. Looking forward, the magic number for 2014 is 2.4%, with the CBI, the OBR and OECD all expecting this level of growth, and with the IMF forecast a...

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CPI inflation down to 2.1%

Bank of England CPI George Osborne Inflation Mark Carney Unemployment

More good news for the Chancellor and Governor of the Bank of England this week as the downward trend in inflation continued. November’s Consumer Price Index (CPI) grew by 2.1% in the year to November, down from 2.2% in October – just 0.1% off target.

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Further clarification of forward guidance

Bank of England Forward Guidance Martin Weale Monetary Policy

MPC member Martin Weale provided further clarification of the Bank of England’s ‘forward guidance’ policy when he addressed A-Level students at Quintin Kynaston Community Academy in London. Martin explained that the unemployment threshold did not meant that interest rates would automatically be raised if unemployment fell to 7%, only that it will review the situation.

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