Bank of England Governor Mark Carney called for the defence

 

Bank of England Governor Mark Carney will be forced to defend his flagship policy of ‘forward guidance’ this week as markets bet on a faster fall in unemployment than the central bank predicts.

The Canadian has said rate-setters will not consider raising interest rates from their current record low of 0.5 per cent until unemployment falls to 7 per cent, which the Bank does not expect to happen until 2016.

But upbeat economic data has prompted money markets to price in a first rate hike in March 2015.

Economists expect Dr Carney to stand by the policy a speech in Nottingham on Wednesday. Deutsche Bank chief economist George Buckley said: “He is likely to echo the same sort of language that the BoE used in July when it said rises in money market rates were ‘unwarranted’.”

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