Interest rates could hit 5% within a decade, according to the outgoing Bank of
Homeowners have enjoyed a historically low 0.5% base rate for five years, but the low level of return has hit savers hard.
Carney insisted that the important aspect for homeowners and businesses was that rates were likely to stabilise at around 2.5% in three years' time, rather than the historically "normal" level of 5%.
Bean, who leaves his job today, said market expectations that the first increase in interest rates would come at the turn of the year were "reasonable". He added: "The market has rates going up to 2.5% over next three years. That seems like a broadly sensible judgment."
He said that when interest rates do begin to rise the bank could, at the same time, start unwinding the pounds 375bn programme of buying British government bonds it undertook between 2009 and 2012. Bean admitted that in the run-up to the crash economists were "not sufficiently cognisant of the risks building up in the financial system", but he insisted the economy is more resilient than when he arrived at the central bank in 2000.
While no early warning indicator is completely reliable, dismissing such readings as inappropriate would be too easy, it said.
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