Carney announces that the UK is not ready for a rate rise

In his speech on Tuesday, Mark Carney, Governor of the Bank of England, announced a divergence from the path set by the Fed by deciding to leave UK interest rates unchanged. Mr Carney is remaining cautious due to the widespread downside risk that remains in the global economy and given that rates do not have much room to be cut further. The Bank of England is of the view that the UK economy is still too weak, with domestic concerns such as slowing economic growth, stagnant wage growth and a substantial current account deficit. Added to this, are concerns from abroad in the form of volatility in China and a continuing fall in the oil price. Soon after the announcement, Sterling fell to a seven-year low against the US Dollar, reflecting the unlikely prospect of a rate rise in the near future unless progress is made in terms of the pace of economic growth and getting inflation on track to its 2 per cent target.