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Carney plays down likelihood of rate rise

THE governor of the Bank of England has appeared to play down the chances of imminent interest rate rises, just days after suggesting they could increase soon.

Mark Carney said that more jobs had to be created before there would be any hike.

And when it did happen any rise would be gradual, he suggested.

But his comments, to the Commons Treasury Select Committee, led Labour MP Pat McFadden to question whether the banker was sending mixed messages.

Mr Carney, a Canadian who was head-hunted by George Osborne for the top job, stunned economic observers earlier this month with comments widely interpreted as suggesting that a rate increase could happen this year.

Yesterday there were calls for the central bank to raise rates more swiftly.

The Institute of Directors said that the first increase should potentially happen as early as the autumn.

But Mr Carney told MPs: "The best collective judgement ... is that there is additional spare capacity in the labour market that can be absorbed further before we would look to begin to ... raise interest rates."

He declined to say when any rate rise might happen.

However, the governor did appear to predict that the base rate would remain below its historic average of 0.5 per cent for at least the next three years.

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