Bank of England governor Mark Carney has said now is not the right time to raise rates, with the UK facing economic uncertainty from a number of factors.
In a speech at Mansion House in London, Carney pointed to falling wage growth and uncertainty from the future of the UK’s relationship with Europe as reasons why rates should remain at their current level of 0.25 percent.
“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.
His comments come less than a week after the Monetary Policy Committee experienced a split on the issue at its monthly meeting, divided 5-3 over whether to raise rates in the closest vote since 2007.
Ian McCafferty, Michael Saunders and Kristin Forbes all voted for a rate rise, but the other five members chose to keep rates at their current level. Rates will now remain at 0.25 percent for another month.
The pound sunk after Carney’s speech, at one point trading down 0.43 percent against the dollar. Sterling continues to trade down against a basket of currencies, down 0.43 percent against the Euro and 0.35 percent against the Yen.