Mark Carney, the Bank of England governor has made a promise to try to keep interest rates lower for longer, ahead of the release of UK GDP growth data for the third quarter, which has shown a growth of 0.8% in the economy, indicating the recovery is definitely underway.
In his pledge, Carney has said that “despite the positive growth he would not look to increase the interest rates any time soon”. He further adds that “although the recovery has begun and it is strengthening, we are not going to withdraw monetary stimulus until it has gained that traction.”
The figures that have been released clearly show that the UK has had its third successive quarter of growth. Of which the construction sector has fared well, buoyed by the growth in house building after the launch of the Help to Buy scheme.
In response to Mark Carney’s pledge, Simon Wells, chief UK economist at HSBC mentions to the Treasury Select Committee that he had expected the central bank to increase its base rate after the next election in May 2015 and that he thought the Bank of England would make a move in the fourth quarter of 2015.
He further adds “that there is a potential you could see employment go down and growth take off, might need to be a rate rise at that time. But when you put politics and economics together I think it would be at least the second half of 2015.”