Carney stresses Bank of England in no rush on rate hikes

Reuters

LONDON, Nov 26 (Reuters) - The Bank of England will be in nohurry to raise interest rates even when unemployment falls tothe 7 percent level it has set as a threshold to considertightening monetary policy, Governor Mark Carney said onTuesday.

"Seven percent is a threshold, not a trigger," he toldparliament's Treasury Committee.

Carney, responding to a question from one of the lawmakers,said it was a "total failure of logic" to suggest that the BoE'snew policy of forward guidance was dead on arrival.

The BoE took a new approach to nursing the economy back tohealth in August when it said it would not consider raisingrecord-low interest rates until Britain's unemployment rate fellto 7 percent.

Since then, unemployment has come down faster than the BoEhad expected - it hit 7.6 percent in the three months toSeptember - raising questions about the duration of its interestrate pledge.

Half of economists polled by Reuters have said policymakers'handling of forward guidance has damaged the credibility of thebank.

In his comments to lawmakers on Tuesday, Carney repeated hisview that financial markets would be pricing in an earlierinterest rate hike if the BoE had not announced its guidanceframework.

Carney and other BoE officials have previously stressed thatthe 7 percent level is not an automatic trigger for a rate hike.

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