Chancellor George Osborne has dismissed claims that the Bank of England policy of providing forward guidance has failed as "laughable".
Mr Osborne told Channel 4 News: "I think that is completely wrong. The idea that it is a failure because your unemployment rate is falling is laughable.
"The credibility of the Bank of England, of the British Government's economic policy is clear there in the markets."
ITV News Economics Editor Richard Edgar is listening to the Bank of England Governor Mark Carney at the World Economic Forum in Davos:
Mark Carney speaking in Davos says the Bank of England will decide how to "evolve" forward guidance next month. #WEF14
Carney says "the degree of stimulus will remain exceptional for some time" so low interest rates until the economy reaches "escape velocity"
Asked if another economic bust is inevitable, David Cameron told Political Editor Tom Bradby: "Government's that claim to have abolished the trade cycle are making a big mistake."
David Cameron today backed Chancellor George Osborne's call for an increase in the minimum wage but not to the extent of overruling the Low Pay Commission, which makes the decision:
Bank of England Governor Mark Carney has said "there is no immediate need to increase interest rates".
His comments come as UK unemployment fell to 7.1% - very close to the 7% figure at which the bank previously said it will consider raising interest rates.
Carney told BBC Newsnight the interest rate rise would be looked at in next month's inflation report but it is important to look at the labour market as a whole, not just one indicator.
Asked if he would be announcing a new threshold rate for unemployment, he said that it was "really about overall conditions in the whole labour market",
He added: "The worst of the crisis is behind us but the financial system is not functioning as well as it could. Uncertainty among households and businesses is still preventing investment."