Mark Carney, the Governor of the Bank of England, has ruled out any short-term increase in interest rates. In a speech he said that based on the evidence and global changes he didn’t feel that there were sufficient inflationary pressures at the present time.
“It is clear to me that, since last summer, progress has been insufficient along these dimensions to warrant a tightening of monetary policy. The world is weaker and UK growth has slowed. Due to the oil price collapse, inflation has fallen further and will likely remain very low for longer. This may mean modestly weaker cost growth through this year, with the likely path for inflation, both headline and core, softer as a result. In short, recent developments suggest that the firming in inflationary pressure we had expected will take longer to materialise”.
He added that:
“That means we’ll do the right thing at the right time on rates”.