Mark Carney says time not right for interest rate rise

Mark Carney

The time is not right for an interest rate rise, Bank of England Governor Mark Carney has said.

Wage growth is falling, and the impact of Brexit on the economy is unclear, Mr Carney said in a speech at Mansion House in London.

The pound fell sharply after Mr Carney’s comments.

Meanwhile, Chancellor Philip Hammond called for smooth Brexit to avoid a “cliff edge” for businesses as the UK leaves the European Union.

“From my perspective, 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,” Mr Carney said.

“In the coming months, I would like to see the extent to which weaker consumption growth is offset by other components of demand, whether wages begin to firm, and more generally, how the economy reacts to the prospect of tighter financial conditions and the reality of Brexit negotiations,” he added.

As Brexit negotiations unfold, the UK economy will be influenced by the expectations of domestic consumers, firms, and markets about any transition period and what will happen in the longer term, Mr Carney said.

He said firms on both sides of the Channel may “soon need to activate contingency plans”.

“Before long, we will all begin to find out the extent to which Brexit is a gentle stroll along a smooth path to a land of cake and consumption,” he said.

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