The economist Ben Broadbent criticised press reports which depicted forward guidance as a commitment to keep the Bank base rate low for a specific period of time.
He told an audience at the London Business School: “There is no promise unconditionally to keep interest rates fixed for a particular length of time.”
The Bank of England governor Mark Carney has previously hinted the Bank rate could stay at 0.5% for as long as three years.
However Broadbent said interest rates were not an end in themselves, and if unemployment fell faster than expected it would be right to consider changing monetary policy. “Nor would we be displeased with such an outcome,” he added.
He described the idea that the MPC could be ‘forced’ to consider an early rise in interest rates as ‘odd’.
The central bank would reconsider its monetary policy only after a significant fall in unemployment, he said. In addition, any change must not jeopardise financial stability or the bank’s attempts to control inflation.
Broadbent struck a more moderate tone to his MPC colleague Charlie Bean, who told reporters in August the central bank had sent a ‘clear signal’ it would not raise interest rates any time soon.
