Is Bank of England Committed to Keeping Interest Rates Low?
The Bank of England announced today that it would keep interest rate levels at 0.5 percent, the result of a meeting held this week. In a decision that mirrored the results of the European Central Bank’s decision to maintain interest rates at their current levels, the Bank of England will hold interest rates at record low levels.
Unlike ECB chief Mario Draghi, who is holding a press conference after the European bank’s Frankfurt meeting, Mark Carney, the governor of the Bank of England, took no such step to placate those who doubt that the Bank of England will be able to keep rates at 0.5 percent for much longer. Instead, Carney is currently attending the G20 summit in St. Petersburg.
In an unprecedented move of forward guidance, Carney declared last month that the Bank of England would hold interest rates constant until unemployment in Britain dropped below 7 percent. Currently at 7.8 percent, the employment rate was initially not expected to reach the 7 percent mark until sometime in 2016, but now many believe that goal could be met by as early as mid-2015. This would put the Bank of England where it would have the ability, even by the standards that it itself laid out, to raise interest rates much earlier than anticipated.