Carney: rate rise likely at "turn of this year"

He added that the path would be "much more important" than the precise timing of the first rate increase, and that interest rate increases would proceed slowly and rise to a level in the medium term that is about half as high as historical averages of 4.5%.

Carney said that were interest rates to rise with expectations, over half of UK mortgagors would pay higher rates in a year’s time, and close to three-quarters of mortgagors in two years’ time.

He added:

"Given these considerations, the MPC will have to feel its way as it goes, monitoring a wide range of indicators and adjusting the pace and degree of Bank Rate as it learns about the effects of higher interest rates on the economy. There is, in fact, a wide distribution of possible outcomes around any expected path for Bank Rate, reflecting the inevitability that the economy will be buffeted by shocks and that monetary policy will have to adjust accordingly.
 
"Even though the current recovery has been the slowest since the Great Depression, taking around 1½ years longer to regain lost ground than it did following the recession of the 1930s, the signs are encouraging. Looking through the blip in the first quarter, the economy has now been growing above trend for a year and unemployment has fallen sharply over the past two. Consumer confidence is around its highest level for over a decade. Businesses investment intentions are solid.  Momentum in the housing market is showing signs of returning.

"To be sure, the international risks to the growth outlook remain. The situation in Greece is fluid, and the on-going slowdown in China could prove more significant. But on balance we can expect the global economy to proceed at a solid, not spectacular, pace."