You are here: Home - Investing -

Carney ties rate rise to recovery of UK businesses

Written by:
Britain must see a business recovery before interest rates can begin to rise, according to Mark Carney, the Governor of the Bank of England.

Carney (pictured) said the country had enjoyed a “consumer-led recovery” but that businesses must begin investing at a much greater rate for him to be convinced the time is right to raise rates, the Telegraph reports.

“The key to this recovery sustaining itself is going to be around business investment,” said Carney in an interview on the BBC’s Andrew Marr Show.

He added: “It’s part of the reason why we’re trying to provide as much clarity to business; that the path of monetary policy, the path of interest rates is going to be calibrated very carefully to ensure that only when we see sustainable growth in jobs, in incomes and in spending will we make adjustments.”

Carney signalled bonus rules could become tougher with time and said any payouts should be “deferred for a very long time”, but he refused to be drawn on the subject of Barclays’s decision last week to increase staff awards despite a fall in profits.

However, he added that no bank should pay bonuses if it would hurt their ability to withstand future losses.

“Their [banks] ability to pay bonuses is restricted if their capital levels start to reduce…these are new rules and these are hardwired. Particularly the last one is hardwired into the capital system and that will start to have real teeth as time goes on,” he said.

Last week, the Bank of England signalled that rates were unlikely to rise before 2015 as Carney reversed his forward guidance policy introduce last August as unemployment fell faster than previously expected.

Under the policy, a fall unemployment to below 7% was given as a threshold for raising rates, with the Bank predicting this would happen no earlier than 2016. However, the jobless rate is now forecast to fall to 6.9% by March, and 6.3% by the end of the year.

Tag Box

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

ISAs: your back-to-basics guide for 2018/19

Here’s everything you need to know to make the most of your unused ISA allowance ahead of the 5 April deadli...

A guide to Sharia savings accounts

A number of Sharia savings products have upped their game in recent months, beating more familiar competitors ...

Five ways to get on the property ladder without the Bank of Mum and Dad

A report suggests the Bank of Mum and Dad is running low on funds. Fortunately, there are other options for st...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

  • Discover how your pension can be used to make a range of investments with attractive tax advantages. By…
  • RT @Defaqto: Looking for your first job? We outline our top tips for understanding and improving your credit score. Take a look @YourMoney
  • @YourMoneyUK Biased. People don't look at this stuff rationally. They also would not buy annuities if there ware decent alternatives.

Read previous post:
BLOG: We’re living in a better investment world

Something is happening in the investment world: platforms and fund managers alike are reducing their fees.