In a speech at Lincoln Cathedral yesterday, the day after UK unemployment figures showed a reversal from the two year downtrend, the Bank of of England Governor, Mark Carney, gave a clear warning on the direction of UK interest rates. The only way has been up for some time but Governor Carney has offered a timetable for economists to hang their forecasts on.
Low interest rates have been with us now for 6 years, the base rate anchored at 0.5% and he sees over the next three years a steady rise to a level in the region of 2%, dependant on economic events in the UK. A second period where unemployment rises, could be the type of event that triggers a rate rise, unlikely to be no more than a ΒΌ% to keep markets calm but this would be a slow, steady well managed move higher, that has been clearly telegraphed and will be factored in by the money markets well before it happens.