Interest rates could increase ahead of the next general election, the Bank of England Governor told The Northern Echo, but he wants to see more jobs created in the North East before he will intervene.
Mark Carney warned bankers they need to be more professional to repair their shattered public image, according to the regional daily newspaper.
“There needs to be an improvement in terms of banker conduct,” he added. “Some institutions have made real progress but it need to be industry wide.”
Mr Carney said “banking needs to be treated more as a profession. We also need to improve infrastructure, both in how markets are organised and the codes of conduct behind markets.”
The Governor said that interest rates rises would be “gradual” even though Britain’s economy is growing faster than any of the world’s developed nations.
“We are one year into a recovery, but it is an uneven recovery,” Mr Carney said. “Our job is to help turn this into a strong, sustainable and balanced expansion. This is not about getting back to where we were in 2008, our aspirations are much higher.
“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,” the Governor said.
“We are here to make policy for the UK as a whole,” he said.
Mr Carney added that “there is still slack in the labour market, you can see that here and right across the country. We need to use up more of that slack before we raise rates.”
He accepted that an interest rate increase would be very unpopular with mortgage payers. Asked if he would rule out a rise before next spring’s election, he said, “No, absolutely not.”
“We will set policy as appropriate to meet our core responsibility to meet the two per cent inflation target. We haven’t set timing conditions on when that will be,” the Governor said.
“We have been as explicit as we can about the nature of adjustments to interest rates, but we cannot be specific.”
He added that he was absolutely clear that it will happen independent of the political cycle.
“When you raise interest rates it is a welcome sign,” the Governor said.