Message from the MPC - ignore our guidance!

The changes to the MPC's unemployment forecasts revealed in its November Inflation Report last week forced the Committee to play down the strict interpretation of its own forward guidance that interest rates could be on the rise as soon as the end of next year.

Thankfully, the spirit of the guidance is fairly clear. The MPC still believes that there is a large degree of spare capacity in the economy which will keep inflationary pressures subdued for a prolonged period even as the recovery continues. Against that background, interest rates are on hold for a long time yet.