James Moore: We'd better not rush headlong into a party as Carney goes for growth

Outlook Mark Carney seems determined to make a noise, and despite an economic backdrop which appears to give him and his colleagues on the Bank of England's Monetary Policy Committee only limited room for manoeuvre, he's surely done it.

His announcement that the historically low interest rates won't move until UK unemployment is down to 7 per cent, and that could take three years or more, was hailed by organisations ranging from the British Chambers of Commerce to the TUC.

They'll be very pleased in Number 11 Downing Street too. George Osborne, the Chancellor, knows he really needs to be able to demonstrate the economy is showing more than tentative signs of recovery if he wants to extend his stay there. Mr Carney may have improved his chances: no longer are monetary policymakers focused on reining in inflation regardless of how many people lose their jobs as a result. Now we're going for growth. Hooray!

At least up to a point. Mr Carney's bold move isn't quite as bold as it looks. While it is important as a statement of intent – and he seems to have quietly moved the inflation target up to 2.5 per cent from 2 per cent without actually saying so – there's nothing binding here.

He's pretty sure that the UK has enough spare capacity to create lots of new jobs – 750,000 will be required to hit his target – without really putting the wind into price rises but he's also made it clear that if the inflationary beast bears its claws he will act. Moreover, while that's a lot of jobs, the US is targeting an even more ambitious 6.5 per cent unemployment before its rates will be raised.

Mr Carney's move is still welcome. However, to ensure that some of the risks economists (who as a breed are almost as cynical as journalists) were warning about are mitigated it may require some joined-up thinking.

One of the benefits of his long-term interest rate policy is it provides businesses, and consumers, with a clear indication of the direction of travel to inform their decisions.

We might hope, therefore, that businesses will be moved to invest some of the cash they've been sitting on. We need to hope consumers don't party too hard.

The TUC has identified one troubling trend behind the recent upbeat economic statistics which have contributed to an impression that Britain is emerging from its long, sullen, economic malaise.

Much of the revival in consumer spending, evidenced by the buoyant July figures from the British Retail Consortium, has been driven by Britons raiding their savings. And perhaps, indulging in credit.

Consumers spending again; that has broadly been hailed as a good thing. But for the economy's long-term health, it would be better if they took the advantage of low rates to pay off some of the vast store of consumer debt that weighs on the minds of some economists and eschewed the temptation to leverage up.

Mr Carney can help by having a word with the Prudential Regulatory Authority (run by the Bank) and the Financial Conduct Authority. They need to ensure that banks, with their newly fat capital buffers, cleaner balance sheets and cheap money on offer to fund mortgages, check their customers can afford the debt when rates do start to rise. Or we'll be heading for trouble again.

peopleFrankie Boyle responds to referendum result in characteristically offensive style
Lewis Hamilton will start the Singapore Grand Prix from pole, with Nico Rosberg second and Daniel Ricciardo third
F1... for floodlit Singapore Grand Prix
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvHe is only remaining member of original cast
Arts and Entertainment
tvHighs and lows of the cast's careers since 2004
Gabriel Agbonlahor, Alexis Sanchez, Alan Pardew and Graziano Pelle
footballAfter QPR draw, follow Villa vs Arsenal, Newcastle vs Hull and Swansea vs Southampton
New Articles
Life and Style
Couples have been having sex less in 2014, according to a new survey
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
musicBiographer Hunter Davies has collected nearly a hundred original manuscripts
New Articles
i100... with this review
Holly's review of Peterborough's Pizza Express quickly went viral on social media
New Articles
Arts and Entertainment
musicHow female vocalists are now writing their own hits
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Senior BA - Motor and Home Insurance

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Market Risk & Control Manager

Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Day In a Page

Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam