Thursday 5th December 2013, a day when the Chancellor unveils his Autumn Statement, the Bank of England’s nine-member Monetary Policy Committee has voted to maintain the status quo and hold interest rates at their record low of 0.5 per cent, a level which it has maintained since March 2009.
Governor Carney has said that interest rates will not change until the unemployment rate falls to 7 per cent. It is currently around 7.6 per cent.
According to recent statements made by Mark Carney, the Bank wants to support the economic revival and avoid any upsets, just as the economy is showing signs of getting going.
The speed of recovery as presented in the Bank’s own Inflation Report in November indicates that the 7% employment threshold set for any interest rate rise could be reached as early as Quarter 4, 2014.
A further indication of the Bank’s conviction that growth will continue and could outpace is the move to modify the Funding for Lending Scheme, and other schemes designed to relax capital restitutions on bank lending, for fear of creating another bubble in the housing market.
In his Autumn Statement, the Chancellor announced that the Office for Budget Responsibility (OBR) has increased growth forecasts: for 2013 from 0.6% to 1.4%, and for 2014 from 1.8% to 2.4%.