Today was an exciting day for Bank of England junkies, in fact for anyone who gets off on central banking and monetary policy communication [cue to those of you who don't to quit reading this]. The Monetary Policy Committee 'updated' its guidance, putting aside the unemployment rate threshold of 7 per cent that had so far been the point that would trigger at least considering an interest rate rise. The reason being that unemployment fell much faster than was anticipated back in August 2013 when the threshold was set, yet for reasons that do not push the MPC to be even close to thinking about raising rates now. Instead, in an extra-ordinary step towards monetary policy transparency, they have set out 18 forecast concepts that will help them and those monitoring them to figure out whether the economy is evolving as expected or not, and, if not, what is likely to be done about it.
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Forward Guidance Mark 2.
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Today was an exciting day for Bank of England junkies, in fact for anyone who gets off on central banking and monetary policy communication [cue to those of you who don't to quit reading this]. The Monetary Policy Committee 'updated' its guidance, putting aside the unemployment rate threshold of 7 per cent that had so far been the point that would trigger at least considering an interest rate rise. The reason being that unemployment fell much faster than was anticipated back in August 2013 when the threshold was set, yet for reasons that do not push the MPC to be even close to thinking about raising rates now. Instead, in an extra-ordinary step towards monetary policy transparency, they have set out 18 forecast concepts that will help them and those monitoring them to figure out whether the economy is evolving as expected or not, and, if not, what is likely to be done about it.