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Bank of England to announce interest rate policy overhaul

12 Feb 2014

Mark Carney, governor of the Bank of England, is set to announce changes to the interest rates guidance policy today.

The rate was linked to unemployment levels, which have fallen in recent months to near the 7% threshold originally set as the benchmark to increase the rate. At the time it was not expected that such unemployment levels would be reached until 2016.

The Bank is not expected to set another numerical target, instead to give ‘soft guidance’ on how and when future changes may take place. Mr Carney has said in previous statements that the forward guidance policy needed to ‘evolve’.

Historically, the Bank has not commented on the direction of interest rates. It is thought likely that Mr Carney will propose a broader range of factors on which to base potential changes.

One of the first members of the Bank of England’s Monetary Policy Committee, Dame DeAnne Julius, said: ‘It’s not just about the headline unemployment rate. It’s about full-time versus part-time, it’s about self-employed versus employed workers’.