MPC members back Carney on forward guidance

clock

Most members of the Bank of England's Monetary Policy Committee (MPC) backed their new governor's policy of forward guidance on interest rates, minutes from the Committee's latest meeting show.

Eight out of the nine members voted in favour of forward guidance, in which the governor indicates to the market how long he intends to hold the base rate at a record low. Carney announced last week he will not move to raise rates until the unemployment rate falls back below the 7% mark.

The minutes of the meeting held on 31 July and 1 August also show the Committee voted unanimously to leave the Bank's quantitative easing programme unchanged at £375bn.

However, the MPC said it "stands ready to undertake further asset purchases while the LFS unemployment rate remains above 7% if it judges additional monetary stimulus is warranted".

The minutes said most members wanted to first gauge the impact of the guidance on asset prices before considering the case for another round of stimulus.

The dissenter on forward guidance was Martin Weale, who voted for a time horizon for the first inflation knockout that was shorter than proposed.

The yield on the 10-year gilt hit a two-year high this morning at more than 2.6% ahead of the announcement.

Meanwhile job market data from the Office for National Statistics revealed the unemployment rate in the second quarter of the year is at 7.8%, unchanged from the previous quarter, but down 0.2 percentage points from a year earlier.

The total number of unemployed people in Q2 was 2.51 million, down 4,000 from January to March and down 49,000 from a year earlier.

Meanwhile, the employment rate form those ages between 16 and 64 was 71.5%, up 0.1 percentage points from January to March.

More on Regulation

The COVER Review: A budget on the horizon, private healthcare and product launches

The COVER Review: A budget on the horizon, private healthcare and product launches

Week commencing 1 September 2025

COVER
clock 05 September 2025 • 1 min read
Autumn Budget 2025 set for 26 November

Autumn Budget 2025 set for 26 November

Investment and reform

Cameron Roberts
clock 03 September 2025 • 3 min read
Broadstone warns against IPT hikes in Autumn Budget 2025

Broadstone warns against IPT hikes in Autumn Budget 2025

‘Green shoots of progress’ in the NHS

Jaskeet Briah
clock 27 August 2025 • 3 min read

Highlights

COVER Survey: Advisers damning of protection insurer service levels

COVER Survey: Advisers damning of protection insurer service levels

"It takes longer than ever to get underwriting terms"

John Brazier
clock 12 October 2023 • 5 min read
Online reviews trump price for young people selecting life and health cover

Online reviews trump price for young people selecting life and health cover

According to latest ReMark report

John Brazier
clock 11 October 2023 • 2 min read
ABI members with staff neurodiversity policy nearly doubles

ABI members with staff neurodiversity policy nearly doubles

Women within executive teams have grown to 32%

Jaskeet Briah
clock 10 October 2023 • 3 min read