Bank of England Gov. Mark Carney Tuesday said that while rate setters' tolerance for above-target inflation is coming to an end, it is too early to raise the key interest rate for the first time in a decade.
In a rescheduled speech to bankers at Mansion House in London, Mr. Carney said weak wage growth raised questions about the strength of domestic inflationary pressures, and he was unsure how the economy would respond to talks between the U.K. government and the rest of European Union on the terms of their separation.
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"From my perspective, given the mixed signals on consumer spending and business investment, and given the still subdued domestic inflationary pressures, in particular anemic wage growth, now is not yet the time to begin that adjustment," he said.
The pound's depreciation since the June 2016 vote to leave the EU has pushed up import prices and inflation. At its meeting earlier this month, the BOE's Monetary Policy Committee voted to leave the key interest rate unchanged at a record low of 0.25%.
However, three members dissented in favor of raising the Bank rate, the largest vote for such a move since the central bank last tightened policy in July 2007.
Mr. Carney voted to leave the rate unchanged, but his comments suggest he views an increase as increasingly likely.
"Different members of the MPC will understandably have different views about the outlook and therefore on the potential timing of any Bank rate increase," he said. "But all expect that any changes would be limited in scope and gradual in pace."
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(END) Dow Jones Newswires
June 20, 2017 03:44 ET (07:44 GMT)