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Rates policy is about to be altered

The Bank of England's ­flagship forward guidance policy linking interest rate decisions to unemployment is widely expected to be explicitly altered this week, after just six months.

The guidance pledges that policymakers will not consider a hike in rates from their current low of 0.5% until unemployment hits 7%, but this now looks likely to be achieved much more quickly than previously thought.

Bank governor Mark Carney has already signalled that the policy needs to "evolve" with changing circumstances, and that this would begin in its ­quarterly inflation report on Wednesday.

The report is likely to assure that the cost of borrowing will remain low for some time, and economists expect that the guidance policy will now be tweaked to take into account a broader range of factors, in order to bolster the message.

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Finance

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