LONDON • Bank of England (BoE) Governor Mark Carney said yesterday that he did not have a "set timetable" for raising British interest rates and wanted to see faster growth and stronger underlying inflation first.
Mr Carney said global and domestic growth had proved weaker than he had expected in the middle of last year, when he predicted that a decision on when to raise interest rates would have come into "sharper relief" by early 2016.
"The year has turned, and, in my view, the decision proved straightforward - now is not yet the time to raise interest rates," he said in his first major speech of the year.
Since taking over the central bank nearly three years ago, Mr Carney has been repeatedly wrong-footed by the British economy's twists and turns after the global financial crisis.
Yesterday, he said he was giving "no pre-commitments" on the timing of a rate rise and avoided tying future rate moves to fixed dates or specific levels of economic indicators.
"The journey to monetary policy normalisation is still young," he told an audience at the University of London. "(It) doesn't have a set timetable, only an expected direction of travel."
Mr Carney said the decision on when to raise rates would hinge on three things. First, the economy would need to grow faster than average, in contrast to signs that growth slowed to below its long-run average in the second half of 2015.
Second, underlying price pressures would need to pick up; and third, core inflation would need to be "moving notably towards target", he said.
British inflation data released earlier yesterday showed that prices were flat for 2015 as a whole, the lowest reading since comparable records began in 1950.
But core inflation - which strips out most of the effect of the past year's slump in oil prices - rose more than expected to 1.4 per cent in December. This was its highest since January 2015, though still well below the central bank's 2 per cent target for headline inflation.
Financial markets and economists have been steadily pushing back the date when they expect the BoE to start raising rates since signs emerged that a slowdown in China and other emerging markets was hurting advanced economies.
Earlier, the International Monetary Fund trimmed its estimate for global growth this year and its chief economist said he expected the BoE to wait for faster wage growth before raising rates.