It may be that Mark Carney simply likes drawing attention to himself, in which case last night’s Mansion House speech was a success. His was not the first hint that rates could rise sooner rather than later – the May monetary policy committee minutes said that the debate on rates was becoming more balanced – but it was surprising coming from him.
Anybody who attended last month’s inflation report press conference saw a governor bending over backwards to steer people away from the idea of early rate rises, emphasing the financial policy committee as the first line of defence and the amount of spare capacity in the economy.
What’s changed? Maybe the pressure is starting to come from the rest of the MPC which seems on balance more hawkish than him. Maybe it was the strength of recent data, particularly this week’s employment figures (though they were balanced by weak pay growth).
Whatever it is, things have changed, and only 10 months after the Bank’s forward guidance was launched – pointing households and businsess to a prolonged period of low rates – they are starting to move. The end of the long period of 0.5% interest rates is not here yet, but it is in sight. The speech is here.
This piece is cross-posted from EconomicsUK with permission.