Interest rate could settle at 3%, says BoE deputy governor

clock

The official UK interest rate could settle at an average of 3% in a few years, the outgoing deputy governor of the Bank of England has predicted.

Charlie Bean (pictured) suggested it was likely to reach that level between 2017 and 2019, the BBC reports.

The rate has been at the historic low of 0.5% since March 2009 and the Bank's governor has indicated it will not start rising before next spring.

But Bean told BBC Radio 4's The World This Weekend there were economic advantages to beginning earlier.

The UK interest rate fell to 0.5% in the wake of the worldwide financial crisis in 2008. It has been kept at that level amid concerns that the finances of many individuals and businesses remain too weak to withstand a rise.

But recent worries about rising house prices in parts of the UK and evidence that the economy is strengthening have intensified the debate over when rates might start to increase.

"The bank rate averaged about 5% in the decade or so before the crisis," Bean told the BBC.

"It's reasonable to think that given the headwinds that are still out there as well as some the global forces that perhaps the level that we go to three or five years out might a couple of percentage points below that," he said.

At the last meeting of the Bank of England's Monetary Policy Committee (MPC) on 7-8 May, members appeared to be shifting their opinions towards raising interest rates.

However, notes from the meeting showed that they voted unanimously to keep rates at a record low of 0.5%.

More on Regulation

Most firms unable to meet bereavement claims performance levels: FCA

Most firms unable to meet bereavement claims performance levels: FCA

Call for improved bereavement handling times

Cameron Roberts
clock 22 November 2024 • 3 min read
Record-high receipts for IPT and employer NICs

Record-high receipts for IPT and employer NICs

HMRC data

Cameron Roberts
clock 21 November 2024 • 2 min read
Chancellor targets FOS modernisation and FCA consultation

Chancellor targets FOS modernisation and FCA consultation

Consultation part of the advice guidance boundary review

Isabel Baxter
clock 15 November 2024 • 3 min read

Highlights

COVER Survey: Advisers damning of protection insurer service levels

COVER Survey: Advisers damning of protection insurer service levels

"It takes longer than ever to get underwriting terms"

John Brazier
clock 12 October 2023 • 5 min read
Online reviews trump price for young people selecting life and health cover

Online reviews trump price for young people selecting life and health cover

According to latest ReMark report

John Brazier
clock 11 October 2023 • 2 min read
ABI members with staff neurodiversity policy nearly doubles

ABI members with staff neurodiversity policy nearly doubles

Women within executive teams have grown to 32%

Jaskeet Briah
clock 10 October 2023 • 3 min read