News — Forward Guidance
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%.
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.