A day after it raised its economic growth forecast, the Bank of England’s Paul Fisher, has warned that the UK economy is “a long way” from normality.
Speaking on Radio 5 live’s Wake Up To Money, the Bank’s director of markets also said the timing of an interest rates rise was “extremely uncertain”.
On Wednesday, the Bank raised its growth forecast for this year from 1.4% to 1.6%, and 2014 from 2.5% to 2.8%. It also said the unemployment rate could fall to 7% as early as next year, the BBC reports.
Governor Mark Carney has previously said the Bank will not consider raising interest rates until the jobless rate falls to 7% or below. But Fisher pointed out that the Bank’s forecasts saw only a 40% chance that 7% unemployment would be reached in 2014.
“The timing of a rate rise is extremely uncertain,” he said. “Our main message is output is growing fast again and looks to be sustained, we’ve got inflation down close to target and unemployment is falling. But we’ve a long way to go until the economy gets back to normality.
A fall to 7% unemployment would allow the Bank to “take stock”, he said, and see whether an interest rate increase “is appropriate at that time”.
The Bank of England’s Monetary Policy Committee, on which Mr Fisher sits, has kept rates held at historic lows of 0.5% since 2009.