MPs interrogate Carney over rates, accuse BoE of acting like “unreliable boyfriend”

Bank of England Governor Mark Carney has faced MPs this morning who quizzed him over the bank’s timetable for interest rate rises.

Carney made it clear that his Mansion House speech last week was designed to prepare the markets for a rates rise. He said: “We wanted the market to adjust to the data, just as we adjust to the data. We were surprised that it hadn’t adjusted.”

But the timing of the first rate rise will be driven by the data, and the rises will be “limited and gradual”, he said.

This means that the Mansion House speech was partly designed to prime the market for such a rise.

Though many expected an interest rates rise to be on the cards in the future, Carney’s speech was surprising given the Bank’s “forward guidance” last August, which said that there would not be a rates rise until at least 2016.

Labour MP Pat McFadden said that the bank’s change of heart over the timing of rates rise means it is “acting like an unreliable boyfriend”.

“One day you’re hot, the next day you’re cold”, McFadden said. “Not a recipe for a strong relationship.”

Carney said that after years of frozen interest rates, businesses can’t expect them to be frozen forever.

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