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The new Governor of the Bank of England Mark Carney has promised to hold down interest rates for a "considerable amount of time" in a bid to "secure the recovery".
Rates will stay at 0.5% - for borrowers and savers alike - until at least 750,000 jobs are created.
However, the Governor did admit that high inflation could push rates up sooner.
The new Bank of England Governor Mark Carney told ITV News that the guidance on interest rates provides "greater certainty, not perfect certainty, but something measurable (unemployment figures)".
Watch the full interview here:
The Chancellor welcomed the decision to hold interest rates at 0.5% until unemployment falls below 7% subject to inflation remaining under control.
In a letter to the governor of the Bank of England, the Chancellor wrote:
The governor of the Bank of England set out how forward guidance could "help to secure the recovery that is now in train" in a letter to the Chancellor.
The Bank also downgraded inflation forecasts, predicting that the rate will not rise above 3% this year.
New Bank governor Mark Carney said that "a renewed recovery is now under way" as the Bank predicted 0.6% growth in the third quarter.
Latest ITV News reports
The Bank of England Governor Mark Carney said he will not consider changing interest rates until unemployment reaches 7%.
The Governor's interest rates pledge favours spenders not savers, as figures for ITV News show.