In an interview with BBC Radio 4’s The Today Programme, Mark Carney, Governor of the Bank of England, has hinted that an interest rate rise could be just around the corner.
Speaking on the show, Mr Carney confirmed that if the economy continues on its current track, “it may be appropriate to raise interest rates” sooner rather than later.
The expected move – which the Governor has confirmed is likely to go ahead “in the relatively near-term” – will mark the first time that the Bank of England’s monetary policy committee (MPC) has raised rates in more than a decade.
Reports suggest that the MPC could act as soon as next month, announcing the rise at its upcoming meeting on 2 November.
Currently, rates are set at a record low of 0.25 per cent, but economists and financial markets predict that the Bank of England will raise this to 0.5 per cent very soon.
When asked about the impact of an interest rate hike on consumer debt, Mr Carney denied that Britain was grappling with a so-called household debt bubble.
Contrary to previous concerns raised by the Bank of England’s financial policy committee (FPC) in recent days, Mr Carney said: “The level of debt burden relative to income in this economy has gone down by 20 percentage points.”
He added: “In the past year, the overall level of debt has just begun to grow in line with GDP.”