Bank of England provides forward guidance on interest rate

At its meeting on 1 August, the Bank of England’s Monetary Policy Committee (MPC) voted to provide 'forward guidance' regarding the future conduct of monetary policy.

The new Governor of the Bank of England, Mark Carney made an announcement on Wednesday (7 August) that the Bank intends to maintain a low interest rate from its current level of 0.5% for the next three years or at least until the unemployment rate has fallen to a threshold of 7%, subject to certain conditions.

http://www.bankofengland.co.uk/publications/Pages/news/2013/096.aspx

Charles Kislingbury, Lead Director at Jones Lang LaSalle’s Exeter office, responds to the Bank of England's new Inflation Report and the forward guidance document announced yesterday, saying: “The Bank of England’s announcement that it will keep interest rates low will help boost confidence and build on the growing signs of recovery that have been evident in recent months. It will be particularly good news for the housing market.

“The move should also reduce the cost of loans to business, including construction and development, leading to greater activity in the key service and manufacturing sectors. This would provide a more resilient platform for the recovery. The resulting growth should incentivise larger businesses to invest some of their cash stockpile, take new business space and employ new staff. The recovery cannot be maintained purely on the basis of growth in consumer debt.”