Bank of England Governor Mark Carney said there likely will be an interest rate hike in the UK soon as the central bank seeks to control inflation as the Brexit process continues.
Markets have been expecting the BOE to raise rates a quarter-point in November. While Carney did not confirm an exact time line, he strongly hinted that some tightening is not far off — “in the coming months,” as he put it.
“We’ve been willing to tolerate inflation being over target. We’re in relatively rare company with having inflation over target,” Carney told CNBC in a live interview from the World Bank/International Monetary Fund session in Washington D.C.
“More people in the UK are working than ever before, so we’re running out of that spare capacity, and that tolerance for having inflation over target in years two and three (of the Brexit process approved in June 2016) has diminished.”
The central bank has warned financial institutions that a run-up in consumer credit on loans and cards could threaten the financial system if not reined in.
As other central banks like the U.S. Federal Reserve are looking to get monetary policy back to normal, the Bank of England is expected to hike its benchmark rate a quarter-point to 0.5 percent.
Similarly, the Fed is likely to hike its funds rate 25 basis points to a range of 1.25 percent to 1.5 percent. Central banks around the world lowered rates in the wake of the financial crisis to drive down financing costs and stimulate the economy.
While Carney and other UK officials have expressed confidence the Brexit process can happen in an…