When is forward guidance not forward guidance? When the Bank of
Now the jobless rate is near 7% and the economy seems to have picked up more quickly than expected, the guidance has suddenly changed to focus on the rather more nebulous benchmark of the output gap. That was the outcome of last week's comments from Carney at the Bank's latest inflation report. And despite the change of tack, the stock market promptly decided it liked the idea that rates would not rise before 2015 and cheered the governor and his colleagues.
More indications of the Bank's thinking on why it dumped its initial forward guidance should come on Wednesday, with the publication of the minutes from its meeting earlier this month. We will also get a further snapshot of the state of the nation with inflation figures expected to show a dip from 2% to 1.9%.
Unemployment figures are also due, with the jobless rate forecast to stabilise at 7.1%. However that data may be scrutinised a little less intensely now in the light of Carney's change of heart.
Carney's change of tack won City support.
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