The Bank of England has announced it will not increase interest rates until unemployment in the UK falls below 7 per cent, which could take up to three years.
In his first major announcement in the post, Mark Carney said a economic recovery in the UK “is now under way”, but acknowledged it “remains weak by historic standards.” Mr Carney’s intervention is the first of the much-heralded “forward guidance” from the Canadian aimed at creating greater stability in the economy. He said that interest rates will not rise again from 0.5 per cent until unemployment has fallen below 7 per cent. By the Bank’s calculations, that will require the creation of another 750,000 jobs and is unlikely to happen for at least another three years. The move will provide a shot in the arm to the housing market and is good news for borrowers and potential house buyers.
