Unemployment drops like a stone to 7.1 per cent - But the Bank of England isn't budging

We've got a two for one on big economics releases in the UK.

Unemployment down

The three month ILO unemployment rate has dropped/risen to 7.1 per cent in the period to November, from 7.4 per cent prior, according to the Office for National Statistics.

Consensus estimates saw that three month rate falling to 7.3 per cent.

That's a pretty sharp fall in unemployment - to March 2009 lows - as August's eight per cent rate drops out of the three month average.

As the unemployment number creeps lower we get closer to the seven per cent level - at which the Bank of England will consider a rise in interest rates.

Here's our table:

Single month level (000s)Single month rateThree month rate
August 20132,5778.07.7
September 20132,3167.17.6
October 20132,2727.07.4
November 2013 7.07.1

Yet still no policy change

The Bank of England has released the minutes from its 8 and 9 January monetary policy committee meeting.

They've said that there is no immediate need to raise rates if the threshold is hit soon in minutes from the January meeting.

A couple of ways to look at this.

On the one hand you have the question of whether rates are appropriate in terms of their economic impact, and on the other you have the Bank's credibility problem if it refuses to raise rates as the labour market improves.

Tinkering with its forward guidance is now becoming a real possibility - but one that would undermine the direction the Bank has attempted to give to markets.