UK interest rates may rise as recovery finally takes hold

Bank of England governor Mark Carney has signalled interest rates may be raised sooner than officials previously forecast as the UK economy recovers “robustly” and inflation slows.

The unemployment rate is more likely than not to reach the 7% threshold, when the BoE might start thinking about increasing borrowing costs from a record-low 0.5%, in the third quarter of 2015, the central bank said in its quarterly inflation report yesterday. It previously didn’t see that happening until the second quarter of 2016.

“You don’t have to be an optimist to see the glass as half full,” Mr Carney told reporters at a press conference. “The recovery has finally taken hold.”