BoE: No rush to increase interest rates

<p>Interest rates in the UK may stay low for some time to come.</p>

The Bank of England has confirmed interest rates in the UK could stay at their current record low levels for some time to come.

Head of the Bank Mark Carney stated that there is no rush to raise the base rate, which has stood at 0.5 per cent – a record low for the UK – for the last few years.

Mr Carney stated that rates could remain at the historically low rate “for some time”, but he accepted that the economic recovery is moving slowly towards the point at which an increase could be possible.

The governor of the Bank of England also said any increases in interest rates would be "gradual", with many industry commentators forecasting a rate rise will occur in the second quarter of next year.

"Securing the recovery is like making it through the qualifying rounds of the World Cup – it's a real achievement, but not the end goal. The prize in the economy is sustained and prolonged growth," Mr Carney said.

As a result of the comments made by the Bank of England's leader, the pound was down by 0.3 per cent against the dollar at $1.6778, while sterling also fell by 0.35 per cent against the euro to 1.2236 euros.

Inflation report

A new inflation report released by the Bank of England also provides a number of economic indicators, with the document suggesting the economy "has started to head back towards normal". It was predicted that growth for 2015 will stand at 2.9 per cent, which is a modest rise from the Bank's previous forecast of 2.7 per cent.

The Bank remains concerned about the amount of “slack” within the UK economy. Back in February, the spare capacity was revealed to be equivalent to between one and 1.5 per cent of gross domestic product.

"The path of slack is uncertain, and there is a range of views on the [Monetary Policy] Committee. For a given growth profile, it will depend heavily on the timing and strength of the rebound in productivity growth," the Bank said in its report.

As well as UK interest rates, there is growing speculation that the European Central Bank could raise its own base rate in the coming months.

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