BANK of England Governor Mark Carney says super-low UK interest rates will remain in place for a while yet as he effectively scrapped the monetary policy framework he introduced just months ago.
In August, the central bank said it would not consider raising interest rates from their super-low levels until unemployment fell to seven per cent.
However, in recent months unemployment has fallen faster than expected, hitting 7.1 per cent at last count.
In a speech to business leaders in the Swiss ski resort of Davos on Friday, Carney said the rate of unemployment consistent with stable inflation in the medium term "is somewhat lower" than the bank had assessed in August.
"The recovery has some way to run before it would be appropriate to consider moving away from the emergency setting of monetary policy," Carney said.
He said evidence that inflation is likely to remain subdued because of weak global growth and lower commodity prices also reinforced the need to maintain the current loose policy.
In December, consumer price inflation fell to two per cent, the first time in years it met the Bank of England's official target.
Carney also sought to reassure businesses and homeowners that when the time eventually comes to move away from the current "emergency settings of policy", any moves would be gradual.
To get the UK economy out of its deepest recession since World War II, the bank has kept its main interest rate at the record low of 0.5 per cent for nearly five years.
"The degree of stimulus will remain exceptional for some time," he said. "That should help reassure British business that the path of interest rates will be consistent with a sustained recovery - that is, with escape velocity."
Carney said the bank's assessment of how to update its forward guidance will begin with the February Inflation Report, its quarterly economic update.
A range of options will be considered, he said.
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