Traders focus on Carney inflation comments

Mark Carney’s first inflation report has highlighted a 7% target for unemployment levels rather than a 2% target for inflation.

Early focus this session has been based around the disappointing Asian markets that were shaken by US comments yesterday, which inferred an imminent end to the quantitative easing policy. The mildly negative sentiment created has rocked an equity market that is already struggling to maintain the momentum seen over the last six weeks. Now that we are well into the holiday season there are considerably less business volumes going through the equity markets.

This morning, during the Bank of England’s inflation report, new governor Mark Carney announced a shift in how the health of the UK economy is measured; the Bank will now target a 7% unemployment level as the barometer for how it will change the base rate. Judging from the phraseology used it is likely that we will see interest rates being held at 0.5% levels for a considerable period of time, which is likely to be measured in quarters rather than months.

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