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The new governor of the Bank of England, Mark Carney, announced the central bank would for the first time in its history gear its economic policy to bringing down unemployment levels.

He pledged that interest rates would hold at 0.5 per cent until unemployment dropped to 7 per cent, which is unlikely to be achieved until 2016, in an effort to reassure the business sector that borrowing will remain cheap for at least three years. It is hoped this will encourage firms to invest and spark new economic growth and job creation.

The new approach, described by the Bank as “forward guidance”, contrasts with that of Carney's predecessor, Lord King, who refused to offer any guidance on the future path of policy rates, writes The Independent.