THE Bank of GovernorMark Carney said that despite the best pace of growth since before the recession, the recovery had been "neither balanced nor sustainable" and required continued support.
He indicated interest rates would have to stay well below the pre- downturn average of five per cent for the next few years - a move designed to help borrowers but that will see savers continue to suffer after five years in which they have remained at 0.5 per cent.
The Bank pledged in August that it would not consider a rise until unemployment fell to seven per cent, in a bid to reassure businesses and homeowners about the cost of borrowing.
But with the target due to be hit imminently, the guidance has been replaced with policy based on a more complex framework linking rates to the output gap in the economy as measured by a series of 18 indicators.
At the time it was set, the threshold was not expected to be reached until 2016, but since then half amillionmore people have found work.
Hepledged that when rates do go up the rise will be gradual but refused to promise there would be no hike this year.
Markets brought forward expectations of an increase to April next year, helping the pound climb against the dollar and the euro.
The governor said continuing difficulties facing the economy meant rates would have to be "materially lower than before the crisis", citing a forecast that sees them at two per cent in 2017.
The governor was speaking at the launch of the Bank's quarterly inflation report, which upgraded its growth forecast for this year from 2.8 per cent to 3.4 per cent.
Meanwhile, the Bank's chief economist,
THE Bank of
GovernorMark Carney said that despite the best pace of growth since before the recession, the recovery had been "neither balanced nor sustainable" and required continued support.