Rates hike to be small but steady, says Mark Carney
Interest rate hikes will be "gradual and limited" because problems facing the economy are likely to take some time to die down, Mark Carney has said.
The Bank of England governor admitted the point at which interest rates begin to normalise was getting closer, but he added they would have to be kept lower than normal to protect the recovery.
In his address to the Institute and Faculty of Actuaries at Celtic Manor in Newport, he said: "The timing of the first rate rise is less important than our expectation that, when rates do begin to rise, those increases are likely to be gradual and limited."
He highlighted muted demand in major export markets, the ongoing battle to repair the deficit and a debt-laden private sector as factors in limiting increases.
And he said that over the medium term, rates could be restrained by continued imbalances between global saving and investment.
Mr Carney added: "All of these factors likely mean that, even when spare capacity is used up, bank rate will need to be materially lower than in the past in order to keep the economy operating."