The Bank of England's (BoE) newest monetary policy committee (MPC) member suggested during testimony today (October 11) that policy-makers might be better served if they update models for unemployment.
Michael Saunders told the Treasury Committee that the BoE uses a 5% value for equilibrium unemployment in some of its models. The value reflects the pre-2008 level of unemployment that was associated with 2% inflation.
The problem for the MPC is that UK unemployment fell to 4.9% in the second quar
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