Interest rates are going to stay at record lows for a long time to come.
Bank of England governor Mark Carney, and fellow Monetary Policy Committee (MPC) member Gertjan Vlieghe have both signalled that interest rates aren’t going to raise anytime soon over the past two days.
Speaking at Queen Mary University of London on Tuesday, Carney told the audience: “In my view, the decision proved straightforward: now is not yet the time to raise interest rates,” adding: “The world is weaker, and UK growth has slowed.”
Carney urged caution on any rate rise, and insisted that he would “do the right thing at the right time on rates.”
He didn’t give any timeline on when a rate rise might eventually come, but a recent Bank of America Merill Lynch note argued that November this year is the earliest it can see rates getting a bump.
Carney’s comments come just a day after fellow Monetary Policy Committee member Gertjan Vlieghe gave an incredibly dovish speech, where he warned that we should “be prepared for the possibility that real interest rates will remain well below their historical average for a very long time” and warned that people shouldn’t just assume that “the future will look like the past” when it comes to monetary policy.
So, in two days, two key decision makers have publicly told people not to expect an interest rate hike anytime soon. The US Federal Reserve in December boosted its base interest rate for the first time since 2009, sparking speculation that central banks around the world would follow suit.
Last week, the Bank of England announced that it was holding the UK’s base interest at 0.5% for a record 82nd month in a row.