What Bank Rate changes did Mark Carney implement after becoming Governor in July 2013?
Executive summary
Mark Carney took over as Governor of the Bank of England in July 2013 with Bank Rate at 0.5% and presided over just three changes to that policy rate during his near-seven-year tenure, ending with Bank Rate at 0.75%—only 25 basis points higher than when he arrived [1]. His era is defined less by frequent rate moves than by the introduction of "forward guidance" and several unconventional options—cuts, a re-expansion of quantitative easing and lending schemes—used around those few rate adjustments [2] [3].
1. The starting point: arriving to a 0.5% Bank Rate and forward guidance as a new instrument
On taking office in July 2013, Carney inherited a Bank Rate of 0.5% and promptly signalled a new approach to communicating future policy by introducing forward guidance—initially tying the prospect of raising rates to unemployment falling to 7%—a move intended to anchor expectations even though it later proved more flexible than the public first understood [1] [4] [5].
2. The Brexit shock and an emergency cut to 0.25%
The most dramatic single move under Carney came after the UK voted to leave the EU: sterling plunged and market stress rose, prompting the Monetary Policy Committee to cut Bank Rate to 0.25% in the summer following the referendum as part of a broader package to stabilise markets and restore confidence [6] [1].
3. The rebound: two small increases back to 0.75%
After the emergency loosening, the Bank moved cautiously back toward normalisation in a two-step process that ultimately left Bank Rate at 0.75% by the end of Carney’s term—an outcome Reuters summarised as just three rate changes in total during his governorship and a rate only 25 basis points above the level on his arrival [1] [7].
4. Why so few changes? The logic of cautious signalling and constrained tools
Carney’s reluctance to engineer large swings in Bank Rate reflected both circumstances and philosophy: weak inflation dynamics, an uncertain post-crisis recovery and later Brexit-related risks meant the Bank relied heavily on communication (forward guidance) and alternative tools—restarting asset purchases and designing lending schemes—rather than frequent base-rate tinkering [2] [3] [8].
5. Forward guidance: a policy innovation that became controversial
Forward guidance—explicit statements on the triggers for rate rises—was a hallmark of Carney’s early tenure, intended to shape expectations and support recovery, but the approach was criticised when the unemployment threshold became less credible as the labour market tightened without expected wage pressures, forcing the Bank to broaden its guidance beyond a simple jobs trigger [5] [4] [9].
6. Internal debate and alternatives: calls for deeper cuts and near-zero options after Brexit
Newly released transcripts and contemporaneous reporting reveal that Carney and some MPC members debated even larger cuts—Carney himself advocated cutting rates toward near-zero in the immediate Brexit aftermath—showing that the choice of three modest changes reflected committee consensus and political economy constraints as much as technical judgment [10] [1].
7. The bottom line: modest numeric change, significant institutional change
Numerically, Bank Rate moved infrequently under Carney—0.5% on arrival, cut to 0.25% after the 2016 referendum, then raised in two steps to 0.75% by his departure—yet his legacy is better judged by how the Bank communicated policy, used non-standard tools and engaged on political flashpoints like Brexit and climate risk than by the small net change in the policy rate itself [1] [3] [2].