Bank of England Governor Mark Carney says the decision to raise interest rates from record lows will become clearer by the end of the year. Hayley Platt reports.
UK interest rates have been at record lows for more than six years. And the big question for businesses and consumers is - when will they go up? In a speech on Thursday, Bank of England Governor Mark Carney gave his strongest hint yet about the timing of a rate rise, saying the decision will come into sharp focus around the end of the year. The pound hit a 7-1/2-year high against a trade-weighted basket of currencies as traders bet the Bank of England would raise interest rates early next year. But National Australia's Bank's Nick Parsons believes the speculation is premature. SOUNDBITE: Nick Parsons, National Australia Bank, saying (English): "It was a very, very, dovish speech." Carney's comments caused sterling to rise against the dollar and the euro, before sliding back. SOUNDBITE: Nick Parsons, National Australia Bank, saying (English): "The actual text of the speech, and I would commend it to all your viewers, is essentially an exposition of why rates will barely rise at all compared to historic levels, why the starting point to that is certainly not imminent and indeed core inflation has got to go up in order to have any confidence that the bank's inflation target will be met." Carney said the prospects for higher rates depended on wringing out the remaining slack in the economy. That would require sustained economic growth of around 0.6 percent per quarter. But he also reiterated that interest rates will only rise gradually from their record low of half a per cent, and to lower levels than in the past.