LONDON — The Bank of England overhauled its policy strategy on Wednesday, saying it planned to keep interest rates at a record low until unemployment falls to 7% or below, something unlikely for another three years.
Barely a month after Canadian Mark Carney took over as governor, the central bank said it would keep interest rates at 0.5% unless inflation threatened to get out of control or there was a danger to financial stability.
The Bank of England was unanimous in its decision to maintain its record-low interest rates earlier this month, minutes showed on Wednesday. The central bank's Monetary Policy Committee (MPC) voted 9-0 to keep its key lending rate at 0.50 percent, where it has stood since March 2009 to stimulate growth, amid Britain's strengthening economic recovery.
Finance Minister Jim Flaherty’s determination to balance Canada’s budget in two years increases the likelihood the government will lean on Mark Carney’s replacement at the head of the Bank of Canada to boost growth in the nation’s economy.
Flaherty’s plan to eliminate the deficit in time for elections in 2015 limits scope for further fiscal stimulus and increases the responsibility for the country’s next central banker to take the lead in responding to any economic slowdown.