July 14, 2015 / 11:29 AM / 2 years ago

Bank of England's Carney says time for rate hike moving closer

LONDON (Reuters) - Bank of England Governor Mark Carney reiterated on Tuesday that the time for a first British interest rate hike since the financial crisis was getting closer as the country’s economic recovery gathers momentum.

Bank of England Governor Mark Carney leaves the Cabinet Office, following a post-Greek referendum meeting with members of the British government in London, Britain, July 6, 2015. REUTERS/Peter Nicholls

“The point at which interest rates may begin to rise is moving closer with the performance of the economy, consistent growth above trend, a firming in domestic costs, counter-balanced somewhat by disinflation imported from abroad,” Carney told lawmakers in Britain’s parliament.

Carney has said a first BoE rate hike is getting closer since at least May of last year.

British government bond prices fell after Carney’s comment with gilt futures down nearly 20 ticks. Yields on 30-year gilts rose to close to an eight-month peak. Sterling jumped by more than a cent against the U.S. dollar.

Carney also repeated his view that British interest rates would not rise to their levels before the financial crisis.

“I do think there are a variety of factors that mean that the new normal, certainly over the policy horizon over the next three years, is substantially lower than it was previously,” he told parliament’s Treasury Committee.

“I see no scenario in which they would move towards historic levels.”

Reporting by David Milliken, James Davey, Neil Maidment, Kate Holton and Andy Bruce; writing by William Schomberg; Editing by Hugh Lawson

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