Bank of England governor Mark Carney has refused to rule out a rate rise before the end of 2017 indicating a hike could happen in the “near term”.
Rates are currently 0.25%, they were decreased from 0.5% last summer after the European referendum.
Speaking on the BBC Today show, Carney (pictured) said the Bank was considering “easing its foot off the accelerator” in light of changes to productivity post Brexit.
“We can see that in the coming months, if the economy continues on this track, it may be appropriate to raise rates.
“We are in circumstances globally, and in the UK given the uncertainty, where we are talking about easing off the accelerator to keep up with the speed limit of the economy. Any interest rate increases when they come will be limited and to a gradual extent.”
Carney felt the “speed limit of the economy” had slowed since Brexit last June, which necessitated the need for a rate rise.
“The speed of the economy is measured by the degree of productivity growth and what is happening to the labour force and in both of those cases we have seen a downtick.”
Asked by presenter John Humphrys whether a rise would be at the next meeting in November, Carney reiterated a rise could happen in the “near term”.
“In the relatively near term, we can expect interest rates would increase somewhat,” he said.
The November meeting of the Monetary Policy Committee will be held on Thursday 2 November.
There has been a division growing between members of the Monetary Policy Commitee over whether or not rates should rise. At the last meeting, two members Michael Saunders and Ian McCafferty voted for a rise.
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