"They've already started guidance, in a less explicit way, with this statement"
- David Tinsley, economist at BNP Paribas
During his first monetary policy meeting as a Governor of the Bank of England, Mark Carney signalled that the central bank will keep borrowing costs at a record low for longer than previously was thought, giving more insight into the future policy. The Bank of England held its benchmark interest rate at 0.5%, and kept the asset-purchase programme unchanged, widely meeting analysts' estimations. Despite stabilization in the economy, Carney expressed his concerns about higher yields, which do not warranted by the U.K. economy.
Carney is known for his dovish approach towards more expansionary and unconventional monetary policies, as he was a Governor of the Bank of Canada. Moreover, he is well-known supporter of forward guidance on the future path of key bank rates, the tool he already used in Canada. Even so, the BoE is expected to raise interest rates by a quarter-point within the next 12 months, as the recovery is gaining pace. In April, markets did not expect any change in monetary policy over the upcoming year or even more.
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