The technical details of the policy are needed to make this precise so that it can be implemented and monitored: the MPC intends not to raise Bank Rate from its current level of 0.5% at least until the Labour Force Survey headline measure of the unemployment rate has fallen to a threshold of 7%. The MPC stands ready to undertake further asset purchases while the unemployment rate remains above 7% if it judges that additional monetary stimulus is warranted but will otherwise maintain the stock of asset purchases and will reinvest the cash flows associated with all maturing gilts held in the Asset Purchase Facility. This guidance linking Bank Rate and asset sales to the unemployment threshold would cease to hold if any of the following three “knockouts” were breached:   if, in the MPC’s view, it is more likely than not, that CPI inflation 18 to 24 months ahead will be 0.5 percentage points or more above the 2% target;    if medium-term inflation expectations no longer remain sufficiently well anchored;    if the Financial Policy Committee (FPC) judges that the stance of monetary policy poses a significant threat to financial stability that cannot be contained by the substantial range of mitigating policy actions available to the FPC, the Financial Conduct Authority and the Prudential Regulation Authority in a way consistent with their objectives. Explicit forward policy guidance can enhance the effectiveness of monetary stimulus in three ways.
The international division of labour is shifting, and when faced with major changes it is a disadvantage for Norwegian business and industry that costs are high. Credit growth Total credit is expanding broadly in line with growth in nominal GDP. However, the composition of credit growth has been giving mixed signals in terms of interest-rate setting over the past year. Household debt accumulation is high, while it is low in the enterprise sector. Household debt has increased sharply since 1994. The rise in the value of dwellings is one of the main factors behind growth in household debt. House prices have risen by an average of around 9 per cent over the past 10 years. High and persistent house price inflation may contribute to holding up credit growth even after prices have levelled off. Since only a portion of the housing stock is sold each year, there will for a long period be some dwellings that are sold at a higher price than when they were last sold. This contributes to sustaining credit growth at a high level. This probably reflects a structural adjustment to the deregulation of the housing and credit markets in the 1980s, after many households suffered financial distress in the wake of the relaxation. Homeowners with dwellings that have risen in value now have greater scope for taking up new mortgage-secured loans, using mortgage-equity withdrawal to finance consumption and other investments.