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Bank of England: 2014 rate rise very unlikely

Friday, 18 Oct 2013 | 2:27 AM ET
The Bank of England
Alice Tidey | CNBC
The Bank of England

Public relations minefield or move to greater transparency? Companies and governments hosting question and answer sessions over the social media site Twitter have had their fair share of mishaps over the years, but that didn't dissuade the Bank of England (BoE) Friday.

Spencer Dale, the executive director and chief economist at the central bank took one hour out of his schedule to answer questions from the public on Friday morning. Twitter users were invited to send questions using the hashtag .

Dale, responsible for the monetary analysis and statistics divisions, also sits on the Monetary Policy Committee which voted last week to keep its benchmark rates unchanged, sticking to its commitment to keep interest rates steady while unemployment remains high. During the session Dale said that he thought it was "very unlikely" that the Bank would raise its main interest rate in 2014. "We need to see sustained period of strong growth," he said.


(Read More: Bank of England 'vigilant' on UK house prices)

By the end of the session, Twitter had responded to the Bank's request with a plethora of weird, wonderful and the more serious questions on the U.K. economy.

The two main topics on people's minds were the forward guidance policy given by the Bank back in August and concerns over the government's "Help to Buy" mortgage guarantee scheme.

Carney announced on August 7 that the central bank will not raise interest rates until U.K. unemployment hits 7 percent. He also gave three other conditions or "knockouts" which would stop the BoE from changing rates: above-target inflation; unanchored medium-term inflation expectations and any threat to financial stability.

(Read More: Wake up call: Bank of England to address rising house prices)

Added to that, the bank has also stated that it will keep a close eye on the rising cost of houses in the country with government stimulus currently fueling fears of a housing bubble. British house prices rose at their fastest rate in 11 years in September and sales hit a four-year high, a survey by the Royal Institution of Chartered Surveyors showed this month. Critics of this scheme include the former Bank of England Governor Mervyn King who called it "too close for comfort" to the U.S. mortgage guarantee schemes that some blame for triggering the financial crisis.

As well these two policy areas, the British public were also concerned about the effects of the BoE's quantitative easing program - with the Bank buying up £375 billion ($603 billion) of bonds in the financial sector – in the hope that lenders will use the funds to invest. There were also worries over inflation.

(Read More: 'Semi-Rude' Draghi, 'Jump the Gun' Carney Criticized)

Despite the Twitter session also contributing some more random questions, the Bank of England can be thankful that this public relations project didn't follow that of British Gas. On Thursday, the same day it announced energy prices would rise by 9.2 percent, the utility decided to take to Twitter to conduct a Q&A with its public, which backfired with customers venting their anger against the company.

CNBC.com's Matt Clinch. Follow him on Twitter @mattclinch81

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