Bank Governor pledges to learn from Japan

Mark Carney yesterday promised that he would heed the lessons of Japan's long stagnation and would not withdraw stimulus from the UK economy too quickly.

"In Japan they made two mistakes," the new Bank of England Governor told the BBC Today programme.

"Firstly they didn't fix the banks quickly enough. Secondly, as their recovery began they pulled back on stimulus too early. We don't want to make those mistakes here in the UK."

Mr Carney, who this week committed the Bank of England to keep policy rates on hold until unemployment drops to 7 per cent, said he had sympathy with savers who have seen their interest payments collapse over the past four years as the Bank has held rates at 0.5 per cent.

But he noted that Japan showed only a sustained economic recovery would allow policy rates to rise.

"More than a quarter century later, interest rates [in Japan] are still at rock-bottom levels" he said. "This is about ensuring that in the reasonable future we're delivering that strong economy that will deliver higher rates."

Mr Carney also repeated that, despite a host of encouraging economic data in recent months, it was premature to conclude that the economy was now growing at a self-sustaining speed.

"We're in the very early stages of a recovery from the weakest period on record," he said. "It really is only a return to roughly historic average rates of growth – we're not making catch-up in our forecasts."