Bank boss: We face rate rises
Carney signals 1st hike in 10yrs
BANK of England governor Mark Carney yesterday braced borrowers for the first rate increase in a decade.
Mr Carney repeated comments by the Bank’s rate setters last week that a hike “is likely to be appropriate over the coming months”.
A rate rise is seen as possible to keep a lid on inflation, which is running at nearly 3%. The last time the Bank raised its base rate was in July 2007 – from 5.5% to 5.75%.
It was slashed in the face of the financial crisis, falling to a record low 0.25% last year. An expected doubling of rates to 0.5% would be a blow for borrowers but a boost for savers – if banks pass it on.
Barclays and HSBC yesterday became the first big banks to bring forward their forecasts for a rate rise, predicting it would happen at a meeting on November 2.
HSBC said it expected the Bank of England to raise rates by 0.2% with a similar increase to follow in May 2018.
But doubters pointed to at least three past occasions when the Bank of England has hinted at a likely hike.
Mr Carney said in a speech to the International Monetary Fund in Washington DC that any rate rises would be “gradual” and “limited”. He claimed one factor that would push inflation higher was fewer migrant workers in the UK after Brexit. A rapid fall could “result in shortages in some sectors that have become reliant on migrant labour, and contribute more materially to inflationary pressures”.