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Incoming Bank of England head urges stimulus unwinding

Incoming Bank of England governor Mark Carney said on Thursday the bank needed to prepare for a smooth withdrawal of quantitative easing stimulus, in comments made ahead of a BoE interest rate announcement.

Canadian central bank chief Carney, who will take the helm from current BoE boss Mervyn King in July, set out his views before a group of cross-party lawmakers representing parliament's Treasury Select Committee.

Lawmakers grilled him over his appointment and monetary policy stance ahead of the British central bank's latest monetary policy announcement at 1200 GMT.

"The bank will need to design, implement and ultimately exit from unconventional monetary policy measure in a manner that reinforces public confidence," Carney said in written testimony to the committee.

"The exit needs to be achieved without disrupting the gilts (bonds) market." His comments came as the central bank's Monetary Policy Committee was widely expected to maintain record-low British interest rates on Thursday and refrain from altering its QE stimulus.

The BoE's main lending rate has stood at the record-low 0.50 percent for almost four years, in which time the central bank has pumped £375 billion ($589 billion, 434 billion euros) of new cash stimulus into the economy.

Under QE, the Bank of England creates cash that is used to purchase assets such as government and corporate bonds with the aim of increasing lending by retail banks and boost economic activity.