Pre-poll rate rise not ruled out

This Is Lancashire: Mark Carney will not rule out an interest rates hike before the election. Mark Carney will not rule out an interest rates hike before the election.

Bank of England governor Mark Carney has refused to rule out a pre-election rise in interest rates, but admitted a hike in the cost of borrowing was likely to prove unpopular.

Mr Carney said any increase - which is likely to hit the pockets of millions of voters with mortgages pegged to the Bank rate - must take place "independent of the political cycle".

He insisted that a rise from the historic low of 0.5%, where it has been held for five years to help the nurse the economy back to health, should be seen as a welcome sign of a return to normality "after some very difficult years".

In an interview with the Northern Echo newspaper, Mr Carney accepted that a rate rise, while pleasing savers, was unlikely to go down well with many home loan borrowers.

But asked if he would rule out such a hike before next spring's general election, he said: "No, absolutely not."

The Bank's rate-setting committee has abandoned a policy linking the cost of borrowing to unemployment, but has indicated that it will instead be based on a more complex framework linking it to the output gap in the economy.

Mr Carney told the Northern Echo: "We have been as explicit as we can about the nature of adjustments to interest rates, but we can't be specific. But we are absolutely clear that it will happen independent of the political cycle.

"I'm not sure we will get a lot of cards or letters to thank us, but we will do it when it needs to happen."

He stressed that any rise would be gradual and added that despite unemployment falling more quickly than expected, there remained "slack" in the labour market "right across the country", more of which needed to be used up before any hike.

Mr Carney said the recovery in the economy had been "uneven" and needed to be seen across the country.

"The point is that if a recovery is just based in the South East, it is neither sustainable nor balanced, it has to include the North East. We are here to make policy for the UK as a whole."

His remarks on interest rates come after Martin Weale, a fellow member of the rate-setting Monetary Policy Committee, indicated that a rise in the cost of borrowing was likely next spring, and appeared to suggest it would come before the May general election.

Elsewhere in the interview, Mr Carney warned bankers that they needed to be more professional to repair their shattered image after the financial crisis.

"I'm not sure bankers need to wear sackcloth, but nor should they jump back into wearing Gucci suits," he said. "There needs to be an improvement in terms of banker conduct. Banking needs to be treated more as a profession."

Comments (4)

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12:58pm Thu 3 Apr 14

MSG says...

I don't mind a significant rise in interest rates. I have a substantial redundancy payment in the bank and used some to pay off my mortgage. I then got on my bike and found a new job !
I don't mind a significant rise in interest rates. I have a substantial redundancy payment in the bank and used some to pay off my mortgage. I then got on my bike and found a new job ! MSG
  • Score: 1

8:25pm Thu 3 Apr 14

mixxer says...

Why mention the election? Why do the media suggest to the public that the Bank of England is somehow accountable to Government or the electorate?
The Bank of England is a PRIVATELY owned business which has complete financial control over any British Government no matter which party forms it.
Why mention the election? Why do the media suggest to the public that the Bank of England is somehow accountable to Government or the electorate? The Bank of England is a PRIVATELY owned business which has complete financial control over any British Government no matter which party forms it. mixxer
  • Score: 0

9:24pm Thu 3 Apr 14

welshmen says...

Another immigrant trying to up the money taken off us, London is doing OK, here in Wales we are not doing OK, yet we will have to dig deeper into our money to pay the rich more, we haven't had a rise for years but Chuck hints we are going to PAY no mater how unwell off we are, Nationalise the Bank of England stop paying the National Debt or repay the debt NO INTEREST payments....
Another immigrant trying to up the money taken off us, London is doing OK, here in Wales we are not doing OK, yet we will have to dig deeper into our money to pay the rich more, we haven't had a rise for years but Chuck hints we are going to PAY no mater how unwell off we are, Nationalise the Bank of England stop paying the National Debt or repay the debt NO INTEREST payments.... welshmen
  • Score: 0

9:24pm Thu 3 Apr 14

welshmen says...

Another immigrant trying to up the money taken off us, London is doing OK, here in Wales we are not doing OK, yet we will have to dig deeper into our money to pay the rich more, we haven't had a rise for years but Chuck hints we are going to PAY no mater how unwell off we are, Nationalise the Bank of England stop paying the National Debt or repay the debt NO INTEREST payments....
Another immigrant trying to up the money taken off us, London is doing OK, here in Wales we are not doing OK, yet we will have to dig deeper into our money to pay the rich more, we haven't had a rise for years but Chuck hints we are going to PAY no mater how unwell off we are, Nationalise the Bank of England stop paying the National Debt or repay the debt NO INTEREST payments.... welshmen
  • Score: 0
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