BoE Cools Down UK Rate Hike Talk

Bank of England (BoE) Governor Mark Carney played down expectations of an earlier-than-expected rise in interest rates on Wednesday, despite signs of a pickup in the U.K.’s economic recovery.

Speaking at a press conference following the publication of the BoE’s quarterly inflation report, Carney said a hike in rates would depend on the degree of slack in the U.K. economy, and the prospects for its absorption.

“The economy has edged closer to the point at which the bank rate will need—gradually—to rise,” Carney said, but stressed that discussions of timings should be kept “in perspective.”

The BoE indicated that a rate hike could come towards the end of the first quarter of 2015, or the beginning of the following quarter, although it stressed that when it did happen, the rise would be gradual.

The inflation report follows calls from some for interest rates to rise soon, given a string of data releases suggesting the U.K.’s economy is picking up steam.

Carney, however, called on a sporting analogy to illustrate his thoughts on the U.K. recovery.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza