Mark Carney defends 'dead on arrival' forward guidance policy

The Governor denied that forward guidance has caused confusion among businesses

Bank of England Governor Mark Carney was forced to defend forward guidance against criticism that the policy is ineffective. (GETTY IMAGES )

Mark Carney was forced to defend forward guidance against criticism that the policy is ineffective.

Treasury Select Committee MP Brooks Newmark said the policy’s credibility had been hit by sharper growth and bigger falls in unemployment since the Bank unveiled the policy in August, prompting it to bring forward its forecast of when the jobless rate will hit its 7 per cent threshold for potential rate rises by 18 months.

But the Canadian accused Newmark of a “total failure of logic” and pointedly added: “What the guidance is doing is giving businesses, households, financial market participants, parliamentarians perspective on the conditions necessary to exist in the economy before… raising interest rates.”

He also denied confusion over the policy among the 200 businesses he has met, adding: “When we survey businesses, we don’t see confusion.”