| LONDON, July 15
LONDON, July 15 Bank of England Governor Mark
Carney said on Tuesday the central bank's forward guidance
policy aimed to signal how interest rates might change over the
medium term, not pinpoint the timing of a first hike.
The BoE introduced forward guidance in August last year,
saying it would not consider a first increase to record low
interest rates until unemployment fell to 7 percent.
It changed the policy in February to focus on a broader
range of spare capacity in the economy after the jobless rate
plunged towards that level much faster than it had expected.
Carney and other Bank officials have said in recent months
that the BoE's benchmark rate would rise only gradually from its
current level of 0.5 percent and would probably settle at lower
levels than before the financial crisis.
"We don't know exactly when the rate cycle is going to
start. It will be driven by the data. We do expect markets to
react to that data," Carney told lawmakers at a hearing in
Britain's parliament on Tuesday.
Carney, asked about comments he made last month that a first
rate hike might come sooner than markets were thinking, said he
wanted to make investors think about the chance of an early
increase in borrowing costs as Britain's economy recovered.
"We were concerned that markets were not reacting to data, a
fairly long run of data, that was as good as expected, if not
slightly better," he said.
"The only guidance that the new MPC is now giving is around
the expected medium-term path of interest rates, not the timing
of the first rate rise."
(Additional reporting by Tess Little, Kate Holton, Karolin
Schaps and Li-mei Hoang; Writing by William Schomberg; Editing
by Catherine Evans)