Bank Of England's Carney Says Not Yet Time To Begin Rate Hikes
20 Juin 2017 - 08:19AM
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The time is not right to begin raising interest rates, Bank of
England Governor Mark Carney said on Tuesday, citing the weak wage
growth and inflationary pressures.
"Given the mixed signals on consumer spending and business
investment, and given the still subdued domestic inflationary
pressures, in particular anaemic wage growth, now is not yet the
time to begin that adjustment," Carney said in his delayed speech
at the Mansion House.
The dovish comment from Carney sent the pound lower.
In the months ahead, the BoE chief said he would like to see the
extent to which weaker consumption growth is offset by other
components of demand and whether wages begin to firm.
More generally, he intends to assess how the economy reacts to
the prospect of tighter financial conditions and the reality of
Brexit negotiations.
Carney's views were in contrast to the hawkish stance adopted by
a few policymakers at the June monetary policy meeting.
Kristin Forbes, Ian McCafferty and Michael Saunders sought a
quarter point rate hike at the June meeting. They said partial
withdrawal of stimulus will help to moderate inflation
overshoot.
Regarding the UK's current account deficit, Carney today said
its sustainability remains an open question.
Further, he observed that protectionist sentiments are once
again rising across the advanced world.
"Excessive trade and current account imbalances are now
politically as well as economically unsustainable," Carney
said.
In his speech at the Mansion House, Chancellor Philip Hammond
stressed that the UK should pursue a free trade agreement that
covers both goods and services.
The European Union and the UK began formal Brexit negotiations
on Monday.
The speeches were originally scheduled for last Thursday, but
were postponed following the tragic fire at Grenfell Tower that
claimed many lives.
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