By David Milliken
LONDON Feb 16 The Bank of England will only
start to increase interest rates when a range of measures
suggest the economy is operating at closer to full capacity,
central bank governor Mark Carney said in an interview broadcast
On Wednesday the BoE said it would look at a broader range
of measures of slack in the economy than just the unemployment
rate when considering whether to raise borrowing costs, and that
it was in no rush to raise rates.
"The path of monetary policy, the path of interest rates is
going to be calibrated very carefully to ensure that only when
we see sustainable growth in jobs, in incomes and in spending,
will we make adjustments," he told the BBC.
"We can responsibly take our time and only adjust interest
rates once more slack has been cut," Carney said.
The BoE said that in the run-up to the publication of its
economic forecasts, markets had been pricing in a first rise in
interest rates in the second quarter of 2015, and that this was
consistent with inflation just below the BoE's 2 percent goal.
Carney also said he was concerned about Britain's history of
booms and busts in house prices, but that a government scheme to
aid home-buyers, Help to Buy, was not a major factor in boosting
prices for now.
"It's still pretty small, it's all outside of London, it's
for lower-priced houses, as a whole it's mainly with first-time
buyers, so its not driving the housing market, but we have a
responsibility to watch it," he said.
Carney said the BoE would state publicly, and on its own
timetable, if it became unhappy about the financial stability
implications of the scheme. The government has asked the BoE to
give its views on the scheme in September.
Mortgage lender Nationwide said last month that British
house prices were up nearly 9 percent on the year, the biggest
annual increase in more than three years.