The Bank of England governor, Mark Carney , has robustly defended his forward guidance policy in parliament against critics who argue it is confusing and has done little to persuade markets that an interest rate rise can be delayed for three years while the economy recovers. Speaking to the House of Lords economics committee, Carney said business and consumers understood the guidance meant that interest rates would stay low until unemployment falls to 7%, which the Bank predicts will happen in 2016. Carney said: "A return to growth is not the same as a return to normality," adding that base rates should remain at the historically low 0.5% level until the recovery was established. He spoke as the Office for National Statistics revealed that the consumer price inflation slowed to 2.1% last month from 2.2% in October and was at its lowest since November 2009 . The move closer to the target of 2% will give policymakers more leeway to keep interest rates at their record low. Carney told the committee Britain's return to growth was sufficient to justify resisting calls to increase the quantitative easing stimulus, which Threadneedle Street has held steady for two years. MPs have accused Carney of establishing a highly technical policy of forward guidance that relies on several caveats that have undermined the simplicity of the message.
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