Bank of England governor Mark Carney has said his decision to implement forward guidance on monetary policy will help to bolster the UK economy.
Speaking to the BBC’s Today programme, Carney argued that the move to link interest rates to economic factors other than inflation is expected to add “more than half a percentage point of GDP”.
Presenting the Bank’s Inflation Report yesterday, the governor said he would not consider increasing the base rate from its historic low of 0.5 per cent until unemployment falls below 7 per cent.
But he also introduced a number of ‘knock outs’ for this policy, saying the Bank would look at lifting rates if inflation rocketed or threats to financial stability emerge.
However, Carney also told the BBC that his prediction of increased GDP growth should be taken “with a grain of salt”.
In the interview, he also said it was “striking” that no women sit on the Bank’s monetary policy committee and argued it was important to “grow top female economists all the way through the ranks” so there are more female candidates.
Carney is not responsible for appointing members of the MPC.