Carney: interest rates to rise in ‘relatively near term’

Mark Carney says interest rates may rise in the “relatively near term”, leading to speculation there could be an increase in November from 0.25% to 0.5%.

“If the economy continues on the track that it's been on, and all indications are that it is, in the relatively near term we can expect that interest rates will increase,” Carney told BBC Radio 4’s Today Programme today.

“We're talking about just easing the foot off the accelerator to keep with the speed limit of the economy and so interest rate increases when they come - when and if they come - will be to a limited extent and gradual,” Carney added.

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The Financial Times says Carney’s “slip of the tongue will cement expectations that the central bank is about to raise the cost of borrowing for the first time in over a decade”. Financial markets anticipate a rate rise to 0.5% when the Bank’s monetary policy committee next meets on 2 November, the FT adds.

Meanwhile, Office for National Statistics (ONS) figures released today show the annual growth rate for gross domestic product was 1.5%, the weakest annual growth performance since 2013.

“Perhaps of greatest concern will be a decline in output in the country’s powerhouse service sector – responsible for the vast majority of UK growth since the financial crisis,” Sky News says.

The pound – which bounced back in early September to levels last seen in the aftermath of the Brexit vote – fell 0.5% against the US dollar in the wake of the ONS figures, back below $1.34.