"Recovery has some way to run" before rate hike, says Carney

The UK is still some way off moving away from "the emergency setting of monetary policy".

Speaking at Davos, Bank of England governor Mark Carney has said that "even thought unemployment is falling faster than expected, the recovery has some way to run".

After Wednesday's news that three month unemployment has fallen to 7.1 per cent - a whisker away from the Bank's threshold seven per cent level - Carney sought to shore up forward guidance.

Last August, the MPC said that when the 7% unemployment threshold was reached, there should be no assumption of an immediate, automatic change to its policy stance. It would assess the prevailing economic conditions, including wider measures of slack and inflationary pressures, before deciding the appropriate stance for monetary policy.

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The Bank’s assessment of how to evolve guidance to changing circumstances will begin in our February Inflation Report. The MPC will consider a range of options to update our guidance, recognising both what we have learned about the behaviour of aggregate supply in the economy as well as the more benign inflation outlook.

Carney pointed to other indicators that weren't performing as well as unemployment - which back in August the Bank seemed to think was the best measure around.