Interest rates will soar to 3% by 2017, as Britain’s economic recovery begins to fully gather momentum, the Bank of England governor Mark Carney has identified.
Carney estimated that rates would soar up from their current historically low value of 0.5% in the next three years, forecasting that they could eventually reach as high as 3% at the end of 2017.
Mr Carney’s comments are thought to be a direct response to an announcement made by the Organisation for Economic Co-operation and Development, who this week identified the UK as the country with the quickest growing economy in the western world.
The OECD estimated that Britain’s economy would grow by an astonishing 3.3% during the first 6 months this year, taking its growth rate past any G7 country at present.
The governor had previously refused to buckle under intense pressure to raise interest rates prematurely, citing that the country’s economic recovery thus far has been ‘unsustainable’. He argued that other factors such as labour productivity and real wages had to pick up before he would begin to raise rates, and outlined that he would attach the speed in which he would implement hikes to the country’s overall economic performance in the future.
However, the OECD’s forecasts have likely given him the assurance he has been looking for on the country’s economic recovery, though he has still maintained a cautious stance and identified that he will only adopt a reactionary approach when it comes to raising rates in the future.
“When the time comes, a welcome time to raise rates, we expect it to be gradual, and the degree to be limited,” he said.
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