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| UK interest rates held until unemployment falls | |
| (35 minutes later) | |
| The new Bank of England governor, Mark Carney, has said the Bank will not raise interest rates until the unemployment rate has fallen to 7%. | |
| The UK unemployment rate currently stands at 7.8%. | |
| He said that until that threshold was reached the Bank would not cut back on its £375bn asset purchase programme. | |
| Mr Carney said the new strategy was to help secure the recovery while ensuring that risks to inflation and financial stability were contained. | |
| While he was upbeat on the prospects for the economy, Mr Carney said it had not reached "escape velocity" yet. | |
| "A renewed recovery is now underway in the United Kingdom and it appears to be broadening," he said. | |
| "While that is certainly welcome, the legacy of the financial crisis means that the recovery remains weak by historical standards and there is still a significant margin of spare capacity in the economy, this is most clearly evident in the high rate of unemployment." | |
| On the markets, shares and the pound fell immediately after the Bank's statement was released, but both recovered quickly. | |
| There had been widespread expectation that Mr Carney would commit the Bank to the new strategy, known as "forward guidance". | |
| With short-term interest rates already at historic lows, the aim is to reduce longer-term interest rates. | |
| Knowing interest rates could remain low, potentially for years, gives banks and mortgage lenders the ability to "lock-in" customers at lower rates for longer. |