BOE on Course to Begin Raising Rates Early Next Year, Carney Says -- Update
August 29 2015 - 1:56PM
Dow Jones News
By Jason Douglas
The Bank of England remains on course to begin slowly raising
interest rates early next year despite recent turmoil in global
financial markets, Gov. Mark Carney said on Saturday.
In a speech at the Federal Reserve Bank of Kansas City's annual
economic symposium in Jackson Hole, Wyo., Mr. Carney said the
likely timing of Britain's first rate increase in almost 10 years
should become clearer around the turn of the year.
"Recent events do not yet, to my mind, merit changing the MPC's
strategy for returning inflation to target," Mr. Carney said,
referring to the BOE's rate-setting Monetary Policy Committee.
The panel's most recent forecasts suggested that officials will
begin gently raising borrowing costs in the U.K. in the first half
of 2016.
The governor's message comes after a week of market turbulence
caused by jitters over the health of the Chinese economy.
The risk of a slowdown in the world's second-largest economy and
its knock-on effects around the globe prompted investors to
question whether the BOE and the U.S. Federal Reserve were likely
to rethink when to begin lifting short-term interest rates in the
U.K. and U.S. from their historic lows.
Mr. Carney said Saturday the U.K. economy remains in good shape
and is unlikely to be too severely hit if China stumbles, according
to a text of his remarks published by the central bank. The direct
exposure of the U.K. economy to China through trade and finance is
limited, he said.
The BOE governor said it is possible that a slowdown in China
and other economies could bear down on inflation in the U.K.,
weakening the case for a rate rise. But he added this had to be set
against a robust domestic expansion and mounting inflationary
pressures at home.
Federal Reserve officials have also been grappling with what the
events of the past week mean for monetary policy in the U.S.
Write to Jason Douglas at jason.douglas@wsj.com
(END) Dow Jones Newswires
August 29, 2015 13:41 ET (17:41 GMT)
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