Q&A: What is 'forward guidance'?

image source, Getty Images
image captionMr Carney said that his forward guidance policy was "working"

The governor of the Bank of England, Mark Carney, has overhauled his policy of "forward guidance", just six months after it was first implemented.

"Forward guidance" is a tool that Mr Carney has shown a penchant for in his previous job heading Canada's central bank, and that he more-or-less put into immediate action in a statement following the first policy meeting under his stewardship.

Mr Carney, and the Bank's Monetary Policy Committee (MPC), delivered explicit guidance regarding the future conduct of monetary policy in August.

But now he has adapted the plan, owing to falling unemployment and an economic recovery in the UK.

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