Accessibility/Mobile Features
Skip Navigation
Skip to Content
Editorial News
Business
Classified Sites

The Canadian Press - ONLINE EDITION

Moving Forward: Bank of England to revise Mark Carney's policy at quarterly inflation

FILE - In this Saturday Jan. 25, 2014 file photo, Governor of the Bank England, Mark J. Carney, gestures as he speaks during a session at the World Economic Forum in Davos, Switzerland. The Bank of England is set to unveil a new policy framework after unemployment in Europe's third-largest economy has fallen far faster than anticipated. Its Canadian governor, Mark Carney, is expected to use the opportunity of the bank's quarterly projections on Wednesday Feb. 12, 2014 to update the guidance on the future path of monetary policy. (AP Photo/Michel Euler, File)

Enlarge Image

FILE - In this Saturday Jan. 25, 2014 file photo, Governor of the Bank England, Mark J. Carney, gestures as he speaks during a session at the World Economic Forum in Davos, Switzerland. The Bank of England is set to unveil a new policy framework after unemployment in Europe's third-largest economy has fallen far faster than anticipated. Its Canadian governor, Mark Carney, is expected to use the opportunity of the bank's quarterly projections on Wednesday Feb. 12, 2014 to update the guidance on the future path of monetary policy. (AP Photo/Michel Euler, File)

LONDON - The Bank of England is set to unveil a new policy framework after unemployment in Europe's third-largest economy has fallen far faster than anticipated.

Its Canadian governor, Mark Carney, is expected to use the opportunity of the bank's quarterly projections on Wednesday to update the guidance on the future path of monetary policy.

The overall message, though, is expected to remain the same: Interest rates won't rise any time soon.

Carney introduced "forward guidance" when he took the top job last summer, saying the bank wouldn't raise its key interest rate from the current record low of 0.5 per cent before unemployment dropped to 7 per cent.

At the time, that threshold wasn't expected to be breached until next year so homebuyers and businesses would have the confidence to borrow and spend.

However, unemployment has dropped far faster than the bank anticipated and now stands at 7.1 per cent as the British economy has shown renewed signs of life.

Unsurprisingly, given the guidance offered, many in the markets concluded that interest rates would rise way sooner than expected. Carney, in response, said the threshold was just a staging post for a policy assessment, setting the scene for an update at Wednesday's publication of the Inflation Report.

While some economists have speculated the bank may ditch forward guidance, Carney has stressed that the recovery is still weak. He notes that Britain's economy is 1.3 per cent smaller than before the Great Recession, that the government's spending cuts to deal with the country's high debts will remain in place for years to come and that inflation remains around the 2 per cent target.

A number of options are available, including reducing the unemployment threshold to say 6.5 per cent, in line with the U.S. Federal Reserve's mandate. But many economists think the Bank may opt for something different.

"It seems more likely that the bank will instead shift the focus to a broader range of indicators, including wage growth, as determinants of future interest rates," said Chris Williamson, chief economist at Markit.

  • Rate this Rate This Star Icon
  • This article has not yet been rated.
  • We want you to tell us what you think of our articles. If the story moves you, compels you to act or tells you something you didn’t know, mark it high. If you thought it was well written, do the same. If it doesn’t meet your standards, mark it accordingly.

    You can also register and/or login to the site and join the conversation by leaving a comment.

    Rate it yourself by rolling over the stars and clicking when you reach your desired rating. We want you to tell us what you think of our articles. If the story moves you, compels you to act or tells you something you didn’t know, mark it high.

Sort by: Newest to Oldest | Oldest to Newest | Most Popular 0 Commentscomment icon

You can comment on most stories on brandonsun.com. You can also agree or disagree with other comments. All you need to do is register and/or login and you can join the conversation and give your feedback.

There are no comments at the moment. Be the first to post a comment below.

Post Your Commentcomment icon

Comment
  • You have characters left

The Brandon Sun does not necessarily endorse any of the views posted. Comments are moderated before publication. By submitting your comment, you agree to our Terms and Conditions. New to commenting? Check out our Frequently Asked Questions.

letters

Make text: Larger | Smaller

Brandon Sun Business Directory
Submit a Random Act of Kindness
Why Not Minot?
Welcome to Winnipeg

Social Media

Canadian Mortgage Rates