"You are seeing strong growth, but you are not seeing adjustment in the short-term expectations of when interest rates will move"
- Mark Carney, Bank of England Governor
Mark Carney, Bank of England Governor, hit back at critics of forward guidance, underscoring that economic recovery would be jeopardized if the nation's central bank had not signaled how long it would keep interest rates at record low. Besides, markets would be factoring in a much earlier interest rate hike if the central bank had not spelt out its plan. The Bank said it would not consider hiking interest rates until unemployment declined to 7%; however, Carney keeps reiterating: "Seven percent is a threshold, not a trigger". He believes that businesses understood the key message of guidance. After Carney joined the U.K.'s central bank, the economy has picked up and unemployment surprisingly fell to 7.6% in the third quarter, spurring the BoE to revise its outlook, estimating now that jobless rate may reach 7% as soon as the last quarter of next year. Nevertheless, Carney admitted that the labour market still has a lot of slack.
Also, Mark Carney criticized the quality of some economic data policymakers receive from Britain's statistics agency, including data deemed crucial to setting monetary policy. Carney said that he was "much more comfortable" with the standard of economic data produced in Canada, where he served as head of the central bank before joining the BoE in July.
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