Bank of England’s Longer-Term Plans Helpful for Investment Strategies

Limetree Financial Services Limited

Bank of England’s Longer-Term Plans Helpful for Investment Strategies

The Bank of England’s new governor, Mark Carney, is setting some longer-term goals for the economy. With new “explicit state contingent guidance,” Carney is linking the Bank’s base interest rate with unemployment. He says that they’ll keep the historic low rate at 0.5% until unemployment falls to 7% (it’s currently at 7.8%).

Carney also says that the Bank isn’t planning to stop quantitative easing (QE) until the same 7% unemployment. The BBC’s news site has a good summary of QE:

When interest rates can go no lower, a central bank’s only option is to pump money into the economy directly. That is quantitative easing (QE).

Although there is no date for any planned interest rate changes, the Bank is helpfully laying out its plans. Here at Limetree, we feel it is good to get some clarity on the long term views from the new governor. It helps considerably when anyone is planning big investments – such as mortgages.

If you have any questions about how the economy affects your mortgage plans, just give us a call.

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