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Will UK jobs plunge change rate pledge?

Wednesday, December 18, 2013 - 01:32

Dec 18 - Britain's unemployment rate tumbles to its lowest level in four-and-a-half years, fast approaching the Bank of England's threshold level for considering a hike in interest rates. The figures were released as BOE boss Mark Carney confirmed British banknotes are going plastic. Sonia Legg reports.

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If Mark Carney was nervous about the implications of falling unemployment in the UK he wasn't showing it. But then the Bank of England boss was only talking about Britain's new plastic bank notes not the broader economy. (SOUNDBITE) (English) MARK CARNEY, BANK OF ENGLAND GOVERNOR, SAYING: "The first polymer note will be the five pound note, featuring Sir Winston Churchill and it will be issued in 2016. It will be followed about a year later by a polymer ten pound note featuring Jane Austen." In fact a 0.2% drop in unemployment in October to 7.4% - the lowest level for four and half years - is getting close to the central bank's threshold for considering an interest rate rise. Carney's forward guidance earlier this year set a trigger rate of 7%. He has since insisted Britain's recovery needs to be deeper before stimulus is rolled back but sterling still jumped. Standard Chartered's Sarah Hewin. SOUNDBITE: Sarah Hewin, Head of Research, Standard Chartered, saying (English): "From the Bank of England's point of view, they're expecting an increase in productivity will actually slow the pace of decline in unemployment and that will mitigate some of the inflation pressures that are building up at the headline level as utility prices rise." Sterling - whether plastic or paper - is currently near a five year high. And its strength could be counter-productive as it jeopardises British exports. For now though the Bank of England is sticking to its guns - helped too by an inflation outlook. It's expected to hit its 2% target next year for the first time in four years.

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Will UK jobs plunge change rate pledge?

Wednesday, December 18, 2013 - 01:32