Carney Says He May Not Be Done Raising Rates at Bank of England
(Bloomberg) -- Mark Carney didn’t rule out raising interest rates again before he leaves the Bank of England in June next year.
Asked whether Thursday’s hike is likely his last, the governor said, “why would I possibly hand away that possibility? It’s certainly not my last decision and there will be a number of very important decisions,” he told Bloomberg Television’s Francine Lacqua in an interview.
The BOE raised rates for only the second time since the financial crisis, with the governor citing the need to temper growing price pressures. Critics say the current economic backdrop isn’t strong enough to warrant an increase in borrowing costs, and that officials may need to reverse course if Brexit negotiations turn sour.
“This is the right decision for the economy given the track that it’s on,” Carney said in the interview. “Obviously, there’s a wide range of Brexit outcomes that are possible, and we all hope that by the end of the year we’ll all much better informed about which path the U.K. and EU are taking.”
Carney said policy makers “see a requirement for a few more rate increases over the next few years, if the economy remains on this track.”
Markets are pricing in about a 65 percent chance of a BOE hike by May.
Carney is due to leave at the end of June 2019 after extending his term by a year to guide the economy through Brexit. Asked if he’d extend it again given the lack of progress in negotiations, he said talks have to conclude well before his term is up and “nothing’s changed” about his plans.
“The crucial period in the negotiations is between now and the end of the year. There needs to be Parliamentary approval by the Brexit date, March 29,” he said. “The most intense set of issues around Brexit are in that horizon.”
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