Start of gradual rise in UK bank rate

CNC
Added On August 6, 2018

The Bank of England. or BoE, has raised interest rates to take them above 0.5 percent for the first time since 2009.

Mark Carney, governor of the central bank, explains what economic changes over the last two years justified the banks decision to put the bank rate on a path back.
 
Carney said when the Brexit referendum put Britain on the road to leave the European Union in June 2016, business confidence fell sharply to levels last seen in the wake of the financial crisis.
 
At the same time inflation was expected to overshoot its target.
 
SOUNDBITE (ENGLISH): MARK CARNEY,  Governor of BoE
"We make the point, very importantly, as an MPC, is what we're looking to do is to return inflation not just to target but sustainably to target. So, we're looking to take into account those feedbacks from the change in interest rate."
 
Carney said, the Bank decided to cut the rate, by 25 basis points, as an emergency measure to support jobs and activity.   
 
An expert said Carney and the Bank were right to raise the rate now, and right to consider a gradual rise in the rate in the coming years.   
 
SOUNDBITE (ENGLISH): AMIT KARA, UK Macroeconomic research at NIESR
"It was our judgment that the bank should act now but to be very clear that if circumstances turn out to be materially different from the bank's forecast, or indeed our forecast, then the MPC should stand ready to reverse course, to change interest rates, to cut aggressively if required, in response to those circumstances."
 
Carney and the rate-setting Monetary Policy Committee (MPC) at the Bank voted unanimously to raise the rate.