Governor
warns of risks
in UK similar to 2008 crisis

Mr Carney admitted low interest rates meant the UK was facing “similar risks” to those behind the crisis that emerged in 2008 – as households and businesses feel encouraged to borrow.

But he set out the prospect of a future when the Bank no longer has to use sharp interest rate rises to control markets.

Mr Carney indicated that achieving an inflation target of two per cent had become a “dangerous distraction”.

The governor made the remarks as he unveiled details of a six-month strategic review which will bring sweeping changes in the Bank’s structure. It came hours after the announcement of three new high-ranking appointments at Threadneedle Street.

Mr Carney’s reforms consolidate new responsibilities for regulation and stability given to the Bank in the wake of the financial crisis in addition to its role in setting interest rates and keeping a lid on inflation.

The governor admitted that low rates before the crash contributed to the risk-taking, adding: “It doesn’t take a genius to see that similar risks exist today.”

But he said that new “macroprudential” powers – which include making sure banks have adequate levels of capital and tools to cool down an overheating housing market – could help.