"As a breach of the [unemployment] threshold becomes imminent, it seems likely that the committee will wish to provide further guidance on the future determinants of policy"
- Charles Bean, deputy BoE governor for monetary policy
As it was widely expected BoE policymakers were unanimous during October meeting on both the interest rate and stimulus programme. All nine members decided to keep the key rate at 0.5% and the level of asset purchases at 375 billion pounds. They also agreed no additional stimulus is needed, as economy is building up steam. Additionally, officials said the unemployment rate is falling significantly faster than anticipated in August, signalling they can bolster its forward guidance, shedding the light on what will happen with the main interest rate if recovery accelerates further. In August BoE Governor Mark Carney introduced widely-discussed forward guidance, saying the central bank will not raise the key rate at least the jobless rate hit 7%. However, he did not specify what would happen in case it falls below the threshold level. As the economy is improving at a stable pace, the unemployment has already fallen to 7.7% in August, and uncertainty is growing what actions the MPC will undertake if the labour market continues to strengthen. The BoE said a hike in interest rate is unlikely before mid-2016; however, investors are betting on a faster increase in borrowing costs. Later this week a report from the ONS is expected to show the economy expanded 0.8% in the third quarter. However, a recent 4.6% Sterling appreciation is expected to dampen import price inflation as well as weigh on export growth in the medium term, according to BoE projections.
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