"Whether we will wish to continue to issue forward guidance . . . as the economy begins to normalise is, I think, an open question."
- Spencer Dale, BOE Chief Economist
Since the introduction of forward guidance by Mark Carney in August, the debates on when and how the central bank would adjust its policy when the goal is reached, have been on heating up. The Bank of England's chief economist, Spencer Dale already admitted the forward guidance is not well designed and is needed to be modified. Labour market has become one of the hottest sets of fundamental data having been closely watched, as the central bank uses jobless rate as a threshold, saying they would keep interest rate at a record low of 0.5% until the jobless rate hits, or even falls below 7%, which is expected to happen not sooner than in late 2016. However, Dale suggested the BoE would move away from guidance, which is linked directly to a specific number and with Carney acknowledging the economy is developing faster than expected, policymakers are urgently considering what will be in place after the present guidance.
Meanwhile, financial markets are already pricing in a potential rate hike earlier than MP's modal forecasts. Additionally, Dale said he has no idea when the Bank Rate is likely to rise; however, it is clear the uncertainty surrounding the MPC's forecasts are weighing on markets. Despite growing uncertainty, bets Mark Carney will be forced to make bold statements during the BoE gathering on November 7 are getting higher each day.
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