JCAP market overview of interest rates 2014


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Having initially formed its forward guidance on interest rates around unemployment, the Bank of England switched tack when the fall in unemployment happened far faster than expected.

Forward guidance mark 2 arrived in February this year when the BOE turned its focus on to the concept of slack in the economy as one of the deciding factors on when rates would start to rise. It identified that there was spare capacity in the economy, thus indicating that the economy could grow at a faster rate without requiring an increase in rates.

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