Guidance is in tatters, the City warns Carney
THE BANK of England’s forward guidance, brought in last summer, has failed already according to City analysts, many of whom expect governor Mark Carney to move the goalposts in a bid to keep the policy alive.
“Forward guidance is effectively dead,” said James Ashley of RBC Capital Markets yesterday, adding that the Bank must decide whether to scrap it or change the criteria.
“There is now a risk of credibility for Carney,” added Saxo’s Nick Beecroft. “If he wants to keep rates lower but keep the threshold at seven per cent, people may start to ask what value it actually has.”
George Tsapouris of Coutts said he believes the Bank will resist pressure to lift rates, but will have to “move the goalposts” by including factors other than just the jobless rate.