Update: FTSE slumps as investors dismiss BoE guidance

London's leading share index fell quickly into the red after new Bank of England (BoE) governor Mark Carney unveiled plans to issue forward guidance on interest rates.

The publication of the Bank's inflation report saw the FTSE 100 reverse earlier gains to slump as much as 1%. The index stood 0.9% lower at 6,544 by mid-afternoon. In its quarterly inflation report, the BoE said it would not consider raising rates until unemployment fell to 7% - an event currently forecast to take place in 2016. But the presence of a number of caveats to that guidance - regarding inflation expectations and financial stability - led investors to contest the Bank's forecasts. In direct contrast to the BoE's aims, currency markets began to price in the possibility ...