Mark Carney, Governor of the Bank of England suggests that an interest rate rise is not imminent.
Steve Povall, Managing Director of Residential Estates, who also sits on the Bank of England’s North West Business Panel said “This is seemingly positive news for landlords and mortgage holders involved with buy-to-let properties as Carney has moved to rule out an immediate rise in interest rates.”.
Carney believes that a controlled monetary policy is not yet needed due to an ‘unforgiving’ global environment stemming from weaker than expected growth in the UK, coupled with ongoing uncertainty in the global economy.
This evaluation comes a mere six months after he suggested that an increase in interest rates would come into ‘sharper relief’ at the start of 2016.
Many people believed that rates would increase at the start of this year which would bring some much-anticipated relief to savers who have been struggling with record low levels in interest rates since the financial crash in 2007.
Despite this, Carney’s recent comment implies that any increase in rates are now a more remote prospect, especially with economists currently suggesting that interest rates will not change until at the earliest, the second half of 2016.
‘Last summer, I said that a decision as to when to start raising Bank rate would likely come into sharper relief around the turn of the year,’ Carney said in a speech at the Queen Mary University of London. He went on to say that, ‘well, the year has turned and, in my view, the decision proved straightforward-now is not the time to raise interest rates.’
With regards to the future, Carney said that any rises in the future would be small and gradual. He said that, ‘it is clear to me that since last summer; progress has been insufficient to warrant a tightening of monetary policy. The world is weaker and UK growth has slowed.’
‘Due to the oil price collapse, inflation has fallen further and will likely remain low for longer. It has always been the case that, because the economy is subject to unforeseen disturbances, the precise path for Bank rate rises cannot be pre-ordained”. He assured that “We’ll do the right thing at the right time.”