Earlier this year the Bank scrapped their previous system of forward guidance based on employment rate and instead opted for a system of eighteen indicators - one of which is spare capacity in the economy.
Carney declined to comment about market expectations of a rate rise in the next quarter, but suggested the Bank is unlikely to raise interest rates soon.
The Bank’s May inflation report says:
“Although the margin of spare capacity has probably narrowed a little since [February], the Monetary Policy Committee continue to judge that there remains scope to make greater inroads into slack before raising the Bank rate.”
In a press conference, Mark Carney said:
“That slack is evident in the 1.4 million people who are working part-time because they are unable to find full-time work, as well as in an unemployment rate of 6.8 per cent.”
