King warns rate rise “not imminent” - Economy - News - Moneyfacts

News

King warns rate rise “not imminent”

King warns rate rise “not imminent”

Category: Economy

Updated: 26/06/2013
First Published: 26/06/2013

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Speculation that interest rates could begin to rise again over coming months has been dismissed by the Governor of the Bank of England (BoE) Sir Mervyn King.

Addressing the Treasury Committee for the final time as Governor, Sir Mervyn warned that interest rates would remain the same for a long time yet and would only be raised once the economy showed signs of improvement.

Suggestions that interest rates could increase came about as a result of the US Federal Reserve announcing that it would be "tapering" its quantitative easing (QE) at some point.

Sir Mervyn stated that the news had been misinterpreted by some who believed the US would be ceasing any further QE, leading to an imminent increase in interest rates.

"I think people have rather jumped the gun thinking this means an imminent return to normal levels of interest rates. It doesn't," Sir Mervyn pointed out.

"Until markets see in place policies to bring about that return to normal economic conditions, there is no prospect for sustainable recovery and without that prospect for sustainable recovery markets understand that it will not be sensible to return interest rates to normal levels," he concluded.

Whilst expectations of an imminent rate increase were downplayed, the Bank's Deputy Governor, Charlie Bean, stated that a cut in interest rates could also still occur, subject to economic conditions.

"A reduction in bank rate, including below zero, remains an option which the Monetary Policy Committee will keep under review lest circumstance change in the future," he said.

What next?

Compare the best savings rates
Bank Account Search - Find the best bank account for you
Find all the best cash ISA

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

Related Articles

Base rate remains unchanged in surprise decision

Earlier today, the Bank of England’s rate setting committee announced that it had voted decisively to keep base rate on hold at its record low of 0.5%. But what does it mean for you?

Budget 2016 – an overview

Well, George Osborne has just revealed the Budget for 2016 – his eighth so far as Chancellor – and as ever, there were some winners and losers from the whole thing. Below is a quick overview of the key points.

What does a US Fed rise mean for the UK?

The US Federal Reserve has decided to raise interest rates, and although you may not think that financial events happening in the US will have much of an impact on UK soil, you may be surprised…
 
Close