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BoE's Carney signals first rate hike will come in Spring 2015

FXStreet (Łódź) - Speaking at the Trades Union Congress in Liverpool on Tuesday, BoE governor Mark Carney said that the first rate hike is planned for spring 2015. The pound hit an intraday high of 1.6155 on the news.

Carney assured that the economic recovery momentum in the UK was stronger than expected, but that the labor market still needed time to recuperate. Unit labor costs remained below the level required to meet the CPI target, he said.

"With inflation at 1.6%, continuing downward pressure from the appreciation of sterling, and with slack remaining, the current inflation environment is benign," Carney stressed, adding that by starting to gradually rise rates in spring 2015, the BoE would most probably meet its inflation and employment goals by the end of the forecast period.

Real wage growth should resume around the middle of next year, the BoE governor added. He also suggested that UK GDP should grow by 3.5% in 2014 and by 3% in 2015.

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