The Bank of
The Bank's governor,
"We've had a signal that rates probably wouldn't rise until 2016, we then had a market expectation that rates would go up in 2015, we then got a speech saying that might be an underestimation.
"It strikes me the Bank is behaving a bit like an unreliable boyfriend. One day hot, one day cold, and the people on the other side of the message are left not knowing where they stand."
Under pressure to explain the apparent confusion surrounding the Bank's stance on rates, Carney insisted the monetary policy committee (MPC) had been consistent in approach, and said the data would dictate the timing of the first rate rise.
However, he said that weaker than expected wage growth suggested there was still considerable a significant amount of slack in the economy to be used up before a rise would be necessary.
"Taken in isolation, the developments on the wage front suggest to me that there has been more spare capacity in the labour market than we previously had thought," he said, adding that low wage growth was balanced against the possibility that growth would be stronger than expected in the second half of the year.
The pound fell to
Carney said that the exact timing of the first rise in rates - which has been on hold at 0.5% since
Markets have been confused by Carney's guidance on rates. At the May inflation report, Carney said the first rise was most likely to be in the second quarter of 2015. A month later, he surprised the City by warning in his Mansion House speech that a rise "could happen sooner than markets currently expect".
Carney suggested that his comments had been designed to correct market expectations that there was only a 15% chance of a rate increase before the end of 2014.
He told the TSC that as a governor of a G7 central bank for the past seven years - in
"We'd like to see the market adjust to the data. Just as our opinions are updating, [markets] should adjust. A short-term market for expectations of Bank rate that moves around with the data is a healthy thing."
The governor of the Bank of
Most Popular Stories
- GE Healthcare Bringing Jobs to Massachusetts
- Spiders Get Bigger, Reproduce Faster in Cities
- Faith Groups Divest From Fossil Fuels
- James Foley Beheading Video Is Real Thing: White House
- Apple Stock Bounces Back Big Time
- Entrepreneur Contest Announced in Idaho
- Why BofA Won't Pay $17 Billion After All
- Obama Weighs Move on Legal Immigration
- Notes From the July FOMC Meeting
- Eric Holder Arrives in Ferguson