Bank of England to deliver forward guidance - live

The UK economy is blooming, if not actually booming, but the Bank of England will pledge to keep borrowing costs down until the recovery is stronger. Photograph: TOBY MELVILLE/REUTERS

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7.57am BST

Forward Guidance day at the Bank of England – at 10.30am

Governor of the Bank of England, Mark Carney. Photograph: Pool/Getty Images

Good morning.

Mark Carney has made a pretty sure-footed start since replacing Sir Mervyn King as Bank of England governor five weeks ago. Today, the central banker from Canada faces his first big test – ushering Britain into a new world of Forward Guidance.

For the first time in its history, the Bank will lay out how long it will leave UK interest rates at their current record low levels.

Economists believe the BoE could pledge not to touch borrowing costs until unemployment had fallen to a certain level, or until the UK has racked up more growth. Or perhaps for a fixed period of time.

The move gives Carney and crew an extra weapon in their monetary policy armory – and with rates down at 0.5% and £375bn of quantitative easing already deployed (to buy UK government debt), they could use it.

As Vicky Redwood of Capital Economics explains:

Guidance could play an important role in the coming months if it keeps rate expectations anchored as the recovery picks up pace.

The details will come at Carney’s first press conference, for the Bank’s Quarterly Inflation Report, in which UK growth forecasts are likely to be raised…

…And that makes today’s task rather trickier that it appeared back in March when chancellor George Osborne invited the BoE to consider forward guidance. Then, Britain feared a triple-dip recession. Now, it knows that the double-dip never happened.

The economy is still smaller than in 2008, but we’ve seen plenty of encouraging private sector data in recent days – including the best month for service sector activity since 2006, and a jump in industrial output.

With some newspapers (not this one) even claiming that Britain is “booming”, should the Bank really be promising to keep the party going?

@DuncanWeldon No idea what you're referring to. pic.twitter.com/FLFfasxlCN

— Jeremy Cliffe (@JeremyCliffe) August 6, 2013

However, with real wages falling and living standards squeezed, Carney can certainly argue that the UK economy needs all the help it can get.

The quarterly inflation report is released at 10.30am BST, immediately followed by a press conference inside the Bank where a flock of Britain’s economics journalists will quiz Carney about his plans.

I’ll track all the action in the liveblog — along with other events across the financial markets, the world economy, and the eurozone. It’s an otherwise quiet day, though, so Carney gets the limelight.

Updated at 8.16am BST

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