THE GOVERNOR of the Bank of England has urged people to focus on the “big picture” rather than obsessing about when interest rates will start to rise.
Mark Carney shrugged off criticism that he has been giving mixed signals over the timing of increases, describing the issue as a “shorter-term question” which would be decided by “nine individuals on the Monetary Policy Committee”.
Instead, he insisted the important thing for home-owners and businesses was that rates were likely to stabilise at about 2.5 per cent in the next three years, rather than the historically “normal” level of five per cent.
His comments yesterday came following jibes from MPs that he has been behaving like an “unreliable boyfriend” by hinting at a rise from the record 0.5 per cent low this year, before appearing to back-pedal.
Mr Carney said the economy was performing even better than the Bank had expected, with unemployment and inflation both falling, and added: “In terms of delivering, we are delivering.
“What matters is what happens in the near term for that, but the big picture is not whether the Bank rate goes from half a percent to slightly above that lowest ever level.”
He indicated that rates were not likely to return to the long-run average of about five per cent, and said increases would be “limited and more gradual than in the past” given the vulnerability of family and government finances.