Carney moves to allay fears of early interest rates rise

By Lauren Burns

Bank of England governor Mark Carney has today reacted to growing speculation that interest rates could increase this year by saying the economy is still not ready.

The continuing fall in the rate of unemployment, as well other positive economic factors such as the UK property market, has led many to speculate that the Bank of England may have their hand forced to increase interest rates before the end of this year. Mr Carney says that the economy is not yet ready for an interest rate increase, and that any change will be "gradual and limited" and "will depend on the evolution of the economy".

Mortgage borrowers have been benefitting from the frozen interest rates since March 2009, and many had expected that the first increase would be held off until the second or third quarter of 2015. In the past weeks there has been growing speculation that the quickening pace of the economic recovery would result in a 2014 increase in interest rates. Following Mr Carney's comments today it has been suggested that an increase could not be held off any later than the first quarter of 2015.

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