Bank of England chief downplays chance of interest rate hike

Cornelia Mascio
Giugno 20, 2017

On the stock market, the FTSE 100 index was up 22.84 points at 7,546.65 in early morning trade.

Delivering his delayed Mansion House speech, Mr Carney said: "Different members of the Monetary Policy Committee will understandably have different views about the outlook and therefore on the potential timing of any Bank rate increase".

Hammond said a final Brexit deal needed to include a comprehensive agreement on trade and services.

Carney admitted that since the Brexit vote the UK's economic prospects have dwindled but said that monetary policy "cannot prevent the weaker real income growth likely to accompany the transition to new trading arrangements with the EU".

The country will soon "begin to find out the extent to which Brexit is a gentle stroll along a smooth path to a land of cake and consumption", Mr Carney added.

Before becoming Britain's foreign minister, Boris Johnson had dismissed the idea of trade-offs in the European Union divorce process by saying his "policy on cake is pro having it and pro eating it".

"From my perspective, given the mixed signals on consumer spending and business investment, and given the still subdued domestic inflationary pressures, in particular anemic wage growth, now is not yet the time to begin that adjustment", Carney added.

He said anaemic wage growth and falling consumer confidence in the wake of Brexit and the indecisive general election mean the economy is not ready for the adjustment.

A rate rise was not yet appropriate, Carney said.

He continued: "In the coming months, I would like to see the extent to which weaker consumption growth is offset by other components of demand, whether wages begin to firm, and more generally, how the economy reacts to the prospect of tighter financial conditions and the reality of Brexit negotiations".

Sterling's weakness been a factor in consumer price inflation reaching its highest in almost four years, contributing to a slowdown in consumer spending and lacklustre first-quarter growth.

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