BOE minutes show bank rates may not rise if jobless threshold is hit

Economists said Wednesday that the minutes of the Bank of England's Monetary Policy Committee (BOE MPC) November meeting showed that the central bank might not raise the bank rate when unemployment thresholds were met.Lacquered wood wall shelves in perfect finishing are set on white painted wall.Antique bath fixturesThese wall shelves are painted in dark brown color to adjust modern bathroom vanity in same design. Antique wall shelves for bathroom are colored in white.The minutes unsurprisingly showed unanimity among the nine members, who left interest rates at a historical low of 0.5 percent and held the Quantitative Easing program at 375 billion pounds (about 603 billion U.S. dollars).Attention now is focused on unemployment rates, currently at 7.6 percent, after the BOE targeted a 7-percent rate as the threshold for review of interest rates.The BOE expected this target to be hit in 2016 when it launched this forward guidance policy in August, but last week it revised forward its expectations to Q4 2014.Blerina Uruci, UK economist with Barclays Economics Research, said, "As in the November inflation report, the minutes downplayed the implications of the lower profile of the unemployment rate for the Bank Rate path. In particular, the MPC judged that given that inflation expectations remained anchored, there 'could be a case for not raising Bank Rate immediately when the 7 percent unemployment threshold was reached'." 

Uruci added, "In this case, once unemployment had fallen to 7 percent, the MPC would reassess what it had learned about the nature of the recovery. As long as the unemployment rate remains above the 7 percent threshold and with inflation risks now significantly less prominent than three months ago, it seems the scene is set for policy inaction."Uruci said the MPC minutes provided little clarity on the policy options once the unemployment threshold is hit,Clawfoot offers a wide selection of Antique tubs, acrylic clawfoot tubs, roll top baths, freestanding bath, clawfoot tub faucets and accessories. although she expected the focus to remain on growth and the level of activity as long as the inflation outlook is benign."We remain of the view that the MPC will remain on hold until Q3 2016, although we see risks that a hike could happen earlier given upside news on growth and should the current rapid pace of the recovery be sustained," said Uruci.Howard Archer, chief UK and European economist with IHS Global Insight, said, the minutes showed the BOE "remains in no hurry whatsoever to raise interest rates.Small and handy horn knife that is excellently suited for cutting fruit. Superb horn knife with a riveted handle.kitchen knives"He added, "As such, the minutes may slightly dilute market expectations that the Bank of England will start raising interest rates early in 2015, or even in late 2014."Archer said the BOE is stressing that significant growth headwinds persist, there is still a lot of slack in the economy and conditions are yet to fully normalize."It is clear the BOE wants to give the economy every chance to develop sustainable decent growth and not to risk choking it off by any premature increasing of interest rates," he added.