Households across the country were today invited to “celebrate” when the Bank of England finally hikes interest rates after five years at 0.5 per cent.
Outgoing deputy governor Charlie Bean told a business audience that there were “clear signs” the economy was on the mend and that the Monetary Policy Committee was “doing its utmost to ensure that the recovery is not nipped in the bud”.
He added: “When the time does come for us to start raising the Bank Rate, we should celebrate that as a welcome sign that the economy is finally well on the road back to normality.”
Bean hailed signs of a recovery in business investment but added that the UK’s export recovery had been “somewhat disappointing” and flagged up a 10 per cent rise in the value of the pound over the past year as contributing to that. “Any further appreciation of sterling … would not be particularly helpful,” he added.
While a rate rise will be good news for savers, rising mortgage payments will hit millions of homeowners on floating-rate deals when rates finally go up.
Financial markets believe borrowing costs will begin to rise in the spring of next year although Bean urged against “getting too hung up on the precise date” of the first rate hike.
The deputy Governor said the past five years had been “tough for both businesses and households”, but they would have been tougher still without the MPC’s emergency liquidity action.