by Chris Becker
Pound Sterling (GBPUSD) has taken off like a rocket in the last hour or so – up from 1.6835 to 1.6927 – nearly 100 pips – all because of a few sweet words from Bank of England Governor Mark Carney.
The sweet words? Rates could be rising sooner than markets expect – from Bloomie:
Mark Carney said the Bank of England could raise interest rates from a record low earlier than investors expect as he expressed concern that mounting debt related to the housing market could undermine stability.
“There’s already great speculation about the exact timing of the first rate hike and this decision is becoming more balanced,” the BOE governor said in a speech at the Mansion House in London today. “It could happen sooner than markets currently expect.”.
This follows yesterdays real move by the Reserve Bank of New Zealand (RBNZ), which “hiked” rates up 25bps to 3.25%, basically on the same intentions – too much housing debt.
Interest rates around the world are at record low levels – the BOE no different having kept them at 0.5% for more than five years – in Europe, the ECB recently dropped rates whilst in the US, interest rates remain at record lows:
Carney goes on to suggest macroprudential tools are in the offing as he appreciates that:
“higher borrowing costs might stretch over-leveraged homeowners and derail the recovery. To head off that risk, the governor said today he’s prepared to act as Chancellor of the Exchequer George Osborne gave the BOE greater powers to curb mortgage lending.”
No such concerns or intentions here in RBA land of course.