Bank of England building.
Bank of England governor Mark Carney has announced interest rates will remain at 0.5 per cent until unemployment is below seven per cent.
Announcing his policy for forward-guidance, Mr Carney said until then he would consider further asset purchases.
Unemployment, which currently stands at 7.8 per cent, is expected to reach this amount around 2016.
Mr Carney said: "The MPC intends not to raise the bank rate above its current level of 0.5 per cent at least until the Labour Force Survey headline measure of unemployment has fallen to a threshold of seven per cent.
"While the unemployment rate remains above seven per cent, the MPC stands ready to undertake further asset purchases if additional stimulus is warranted.
"The path of bank rate and asset purchases will, as always, depend on economic conditions. Instead, we are setting out the conditions that will need to met before we consider increasing the bank rate or reducing our stock of asset purchases."
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However, he said this did not mean that interest rates would "automatically be increased" when the threshold was reached. Rather it would be a prompt for the Monetary Policy Committee to reconsider the rate.
He also highlighted that the guidance would cease to apply if material risks to price stability or financial stability arose.
Unemployment rates were chosen as a "reliable and well understood" measure and one that would allow monetary policy to test for a rebound in productivity.
Mr Carney was asked by Chancellor George Osborne to produce forward-guidance to outline the path interest rates will take.
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