Bank of England has reassured that there is no hurry to hike the interest rates in the next year. With the surprising increase in the rate of recovery in the last quarter, BoE governor indicated that an increase in the rate, will have an adverse effect on the consumers and businesses.
Threshold of unemployment
The unemployment rate in the country has dropped below 7% and still the bank wants to keep the interest rate, at the same level. The governor advised the people not to be too assured about the promising figures, due to the economic recovery. This can be taken as a slight warning as the prices are rising faster than the wages.
When the governor addressed the concern about the future housing bubble, he mentioned that he believes that the bank would be able to manage the problem without falling into deep levels of debts. The shadow Chancellor praised the growth in the economy but indicated that though the economy has positive growth, the current situation is keeping millions of households under debt. Though ministers are hoping the interest rate should not rise, the Prime Minister said that they will eventually rise and due to the unprecedented economic challenges, the very low interest rate was proposed to the country.