Q: Markets were convinced you'd cut rates.......>

BOE: Q: Markets were convinced you'd cut rates today. As it turns out, it's

relatively hawkish and suggests tightening ahead. In context of guidance, does

this suggest it doesn't work or would you suggest successor sticks with this

communication policy?

- A: Forward guidance part of the armoury available to CBs. Useful when

equilibrium interest rates very low or when policy reaches a turning point. Jury

is "IN" on forward guidance and it's utility. Helps give clues on the extend of

policy change around turning points and is helpful to communicate with

households and businesses directly. There's considerable evidence this works via

surveys, interest rate expectations. Speeches given underscore debates that

exist within meetings. Most recently this concerned whether there'd be an

economic bounce after the election. I [Carney] repeated what had been said in

the December minutes. Majority voted for hold as "so far, good enough", but made

it clear data will have to fill in, else additional stimulus likely required to

reinforce GDP, inflation recoveries. Different people in market have different

views.