Mark Carney, the Governor of the Bank of England has ruled out a UK interest rate rise in the immediate future. Mr Carney placed the blame for a delay in hiking interest rates on low oil prices and the current unforgiving global environment. This announcement shows a marked change from last July, where the Governor suggested that rates were likely to begin to rise around the beginning of the new year. Whilst Mr Carney ruled out any immediate tightening of monetary policy, he was silent on whether there would be any loosening in the form of an interest rate cut or further quantitative easing.
The Governor said that three factors would need to be present before UK interest rates rise. Firstly, UK economic growth would need to exceed the global average trend. Secondly, wage growth would need to strengthen and UK productivity rise. Thirdly, core inflation must approach the BoE’s target of 2%, with it currently hovering around the 0.2% mark. The decision not to increase interest rates marks a departure from the US economic policy, after the Federal Reserve recently decided to increase US interest rates