A Bank of England boss this morning played down the chance of there being a rise in interest rates anytime soon.
When asked about the prospect of rates rising from 0.5 per cent to 2.5 per cent in a few years, deputy Bank of England governor Jon Cunliffe told BBC’s Wake Up to Money that rises would be delivered in a “gradual and limited way”.
It follows Bank of England chief economist Andy Haldane calling for an immediate rise earlier this month, igniting speculation that there could be a rise in August.
The Monetary Policy Committee voted by 6-3 in favour of holding interest rates at 0.5 per cent in May.
“Financial markets are assuming that interest rates go up by another three-quarters of a percentage point over the next couple of years,” Cunliffe said.
“We do our forecasting on the basis of where the financial markets have those interest rates and we think we have inflation at target at those sorts of levels.”
But he added British households with high debt could get into trouble if another recession hit the UK.
“Household debt is quite high by historical standards but households have worked hard to put those debt levels down. But within that there are areas that you do worry about,” he added.
“You worry about households that have high debt could be badly affected in a recession.”
Source: City A.M.