New Bank of England governor Mark Carney garnered near-unanimous support for a radical new policy of linking interest rate rises to unemployment, but members were split on a key part of the scheme.
Minutes from the bank’s monetary policy committee (MPC) showed eight of its nine members voted for the new strategy of “forward guidance” earlier this month.
The policy means rates will not rise from their record 0.5% low until unemployment has fallen to 7% creating more than 750,000 new jobs unless there are fears that inflation is spiralling out of control.
But the minutes revealed a range of views on when an inflation “knockout” should kick in. Under the new policy, the unemployment link will be severed if inflation looks likely to hit 2.5% or more 18 to 24 months ahead.
Minutes showed some members were worried that a long timescale could shake confidence in the bank’s commitment to stable price rises, prompting MPC member Martin Weale to vote against the new policy.
The report also showed another unanimous vote in favour of holding asset purchases at £375 billion and rates at 0.5%.
However, some members still saw a “compelling” need for more economic stimulus.
