Bank of England policy team back forward guidance

Bank of England The Bank adopted its new forward guidance policy earlier this month

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Bank of England governor Mark Carney received almost complete support for his new forward guidance policy from his colleagues on the Bank's Monetary Policy Committee (MPC).

The latest MPC minutes show eight out of nine of the MPC's members voted for the strategy at its August meeting.

The policy means the MPC will not raise rates from their current record low of 0.5% until unemployment falls below 7%.

Figures out on Wednesday showed the rate of unemployment remains at 7.8%.

However, the minutes showed less unity on when an inflation "knockout" would be activated.

Under forward guidance, if it appears that inflation will rise above 2.5% at some point within the next 18 months to two years, the link to unemployment can be broken and interest rates can rise.

Some members of the MPC felt that the time-frame was too long and could affect confidence in the Bank of England's ability to keep prices stable.

As such, MPC member Martin Weale voted against the policy.

Meanwhile, all nine MPC members agreed that the £375bn asset purchasing programme, known as quantitative easing (QE), should remain in place and that interest rates should hold steady at 0.5%.

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