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Governor talks of monetary tightening

Bank governor drops rate rise hint despite GDP slip

Mark Carney

Mark Carney: hinting at a November rise

Bank of England governor Mark Carney has hinted at a rise in interest rates in November, despite new figures showing UK economic growth has slowed.

He said interest rates will rise ‘in the relatively near term” if the economy stays on track.

In a broadcast interview, he said: “What we have said, that if the economy continues on the track that it’s been on, and all indications are that it is, in the relatively near term we can expect that interest rates would increase somewhat.”

Most economists expect the Bank to raise its base rate to 0.5% from 0.25%.

However, output slowed in the second quarter to 1.5%, according to the final reading of GDP by the Office for National Statistics.

GDP rose by 1.8% in the first three months of the year. Quarterly growth is unrevised at 0.3%.

The pound was trading $1.3379 down more than half a cent.

Chris Williamson, from IHS Markit, said: “Fresh economic growth estimates from the Office for National Statistics confirm that the first six months of 2017 saw the weakest start to the year since 2012.

“The new GDP estimates confirmed that the economy grew by a modest 0.3% in the second quarter after a similar expansion in the first three months of the year.

“Compared to a year ago, the economy was just 1.5% larger in the second quarter, its worst annual growth rate since 2013.”




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