UK interest rates on hold until unemployment falls

New Bank of England governor Mark Carney gave households and businesses a boost as he said interest rates will remain at their record low until unemployment falls below 7%.

Unveiling a new strategy of forward guidance, the Bank said rates will remain at 0.5% until at least the end of 2016 unless inflation rises sharply.

Mr Carney said that “a renewed recovery is now under way” as the Bank predicted 0.6% growth in the third quarter and said inflation is unlikely to rise above 3% this year – lower than previous fears of a peak of around 3.5%.