Despite having recently hinted that a rate rise could come relatively soon, while giving evidence at the Treasury Select Committee this morning Carney said that: "Taken in isolation the continuation of development on the wage front suggests to me that there has been more spare capacity in the labour market than we previously had thought."
He also told the Committee that regardless of timing, any increase would be "limited and gradual".
And he said that the latest data was giving the impression that earnings could soon be on the up, adding that in five years time he expected the base rate to be “materially below” 5%.
Chris Williams, CEO of Wealth Horizon, said:
“Despite its protestations, the Bank of England has significantly overestimated the level of clarity that the market and consumers have on its strategy around interest rates.
"The MPC was initially taken aback by the degree of certainty from the market as to when the first adjustment to interest rates might happen and then the Governor appeared to U-turn on his Mansion House speech in the TSC hearing. These actions are all symbolic of the mixed messages and confusion being fed into the market.
"The Governor has asked the country to focus on the medium rather than the short term. Yet, markets can expect volatility when rates start to climb and the average mortgage repayment could rise by hundreds of pounds a year. So, understandably, retail investors and homeowners are unlikely to focus on the medium term when even in the short term any rate rise will have a significant impact for them.
"These concerns need to be addressed. We need to ensure clarity of expectations, something that the TSC was asking for, but I'm not sure that is what the country is getting."
