Chancellor of the Exchequer George Osborne said the U.K.’s exit from loose monetary policy “is going to come” and Bank of England Governor Mark Carney has indicated that borrowing costs are set to rise.
“The governor has signaled, I think, pretty clearly the direction that interest rates are heading,” Osborne said in an interview with the BBC’s Radio 4 “Today” program during a trip to China Tuesday. “We’ve got the right people to make that call.”
Carney said last week there’s a chance that rates will need to increase from a record low in early in 2016 if the economy continues to grow and inflation pressures pick up. The governor was among the majority of officials who voted this month to keep the benchmark at 0.5 percent, with Ian McCafferty maintaining his call for a quarter-point increase.
While reiterating that monetary policy was a matter for the independent central bank, Osborne said talk of removing stimulus was an indication of economic success.
The BOE and the U.S. Federal Reserve are getting close to withdrawing the emergency measures put in place to counter the financial crisis, with rate-setters in both countries weighing slow inflation against solid labor-market data.
“The general signal coming from the Bank of England, the general signal coming from the Federal Reserve, is because the British and American economies have been growing robustly in the last couple of years,” Osborne said. “The exit from very loose monetary policy is going to come.”