Beyond the London bubble

14 May 2014 By Ian Campbell

Investors think the UK is almost ready for higher rates but Mark Carney disagrees. The BoE governor still sees slack and thinks his Financial Policy Committee can tackle housing excess. He will try to delay a rise as long as he can. It’s a risky call, but probably right.

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Mark Carney, governor of the Bank of England, said on May 14 that Britain’s economic recovery is still in its early stages. Traders had expected that he would be more positive in his comments at the press conference for the release of the quarterly inflation report. Sterling fell to a one-month low against the dollar of $1.677.

Carney acknowledged a strong bounce-back in the labour market since last year, lowering the BoE’s forecast for unemployment for the next couple of years. “As time has moved on and the recovery has been sustained, the economy has edged closer to the point at which Bank Rate will need gradually to rise.”

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