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Bank of England to hold interest rates at 0.5% ‘for some time’
The Bank of England has said today it will not hike interest rates “for some time to come” – with the base rate potentially at 2% by 2017.
Governor Mark Carney also ditched his forward guidance policy linking a rise in rates to jobless figures.
Carney said last year that rates would not begin to rise until the unemployment rate in the UK fell to 7%.
However, a rapid decline in the unemployment rate – which Carney conceded has surprised the Bank – has left the rate at just 7.1% by the end of 2013.
As such he has been forced into something of a U-turn on forward guidance, attempting to push back expectations of a rate rise.
To that end, unveiling the Bank’s quarterly Inflation Report today, Carney stressed rates will remain at a record low of 0.5% “for some time to come”.
The Bank will now attempt to give much more information about its thinking on interest rates, based on numerous variables, without giving a precise forecast.
