The governor of the Bank of England Mark Carney has described the the UK's recovery as "neither balanced nor sustainable".
Mr Carney explained that the ultra-low interest rates will remain until the general election in 2015 due to the slow process in the UK's recovery efforts. It was reported yesterday (February 12th) that new forward guidance would be likely to stay at the 0.5 per cent rate, the lowest figure the country has seen in nearly five years.
The governor of the Bank of England explained that the decision was taken as the country was not yet ready to cope with an end of emergency measures which were put in place following the start of the recession in 2008. However, despite interest rates remaining at significantly low figures, Mr Carney reassured both businesses and homeowners that when they are raised it will be a slow and gradual process.
In a statement, Mr Carney said: "A few quarters of above-trend growth driven by household spending are a good start but they aren't sufficient for sustained momentum. For a sustained and balanced recovery, the degree of stimulus will need to remain exceptional for some time."
The Bank has been forced to abandon its reliance on unemployment as guide to interest-rate policy following a significant drop in the amount of people out of work following summer 2013. It will now use Threadneedle Street to assess 20 indicators of how the economy is performing and then determine what can be done to drag the UK back to recovery.
Interest rates have remained low in the UK as a way of building confidence that the country is slowly rebuilding back to its pre-recession phase. However, the public is concerned about the impact the move could make on their day-to-day lives in the coming years.
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