Bank of England Gov. Mark Carney said Wednesday the case for raising interest rates in the U.K. may strengthen in the coming months if the economy keeps motoring despite weak consumer spending.
Speaking at the European Central Bank's forum on central banking in Sintra, Portugal, Mr. Carney said that if wage growth picks up and business investment increases then he will reconsider the case for holding the BOE's benchmark rate at a record low of 0.25%. He voted earlier this month to stay on hold, saying officials on the Monetary Policy Committee faced a trade-off between rising inflation and slowing growth that he believed called for no change in policy.
Continue Reading Below
Shortly after the comments, sterling rose 0.9% against the U.S. dollar to $1.2926, the highest in three weeks. Yields on 10-year U.K. government bonds jumped to 1.181%, the highest since early May, from the previous day's close of 1.078%.
"Some removal of monetary stimulus is likely to become necessary if the trade-off facing the MPC continues to lessen and the policy decision accordingly becomes more conventional," he said, according to a text of his remarks.
Mr. Carney's comments offer fresh evidence the BOE is inching toward a rate rise after cutting borrowing costs in the wake of last year's Brexit referendum.
Write to Jason Douglas at firstname.lastname@example.org
(END) Dow Jones Newswires
June 28, 2017 10:17 ET (14:17 GMT)