Will unemployment fall sooner than the MPC thinks?

There seems to be a general view that the MPC is underestimating how quickly unemployment will fall to the 7% threshold set under forward guidance, helping to explain why markets expect interest rates to rise earlier than the MPC’s forecasts suggest. It is true that it would not take much change in the MPC’s assumptions about GDP or productivity growth for unemployment to reach 7% far more quickly than it expects. But in our view, unemployment is more likely to fall even more slowly.