Dec. 9 - A surge in UK housing activity and a pickup in the current account deficit requires ''vigilance'' not ''panic'', according to Bank of England Governor Mark Carney, reiterating plans to keep rates low. Conway G. Gittens reports.
The British economy is out of recession and is surprisingly well on its way to rebuilding what was lost, but not at a pace quick enough for Bank of England Governor Mark Carney to consider hiking interest rates in the near future. SOUNDBITE: BANK OF ENGLAND GOVERNOR MARK CARNEY (ENGLISH) SAYING: "Housing activity is picking up and price growth appears to be gaining momentum. Moreover, the UK current account deficit is near record levels. These developments merit vigilance but not panic. The housing recovery could reflect higher future income expectations, prompted by the nascent recovery, and better credit conditions. Although the current account position underscores the need for the recovery to shift over time towards investment and export growth, it would be unreasonable to expect that to have happened already." Though Carney has taken moves to slow down rapid gains in the U.K. housing market, inflation watchers remain nervous. Speaking at a New York event and taking a page from "A Christmas Carol", he offers another assurance that UK rates should remain steady for some time. SOUNDBITE: BANK OF ENGLAND GOVERNOR MARK CARNEY (ENGLISH) SAYING: "The Ghost of Christmas Past should not be forgotten. A recovery may be gaining pace but our economies are a long way from normal. Leverage is still high and weak demand for advanced economy exports should persist for some time. The Ghost of Christmas Yet to Come suggests that it is extremely unlikely that equilibrium interest rates will return to historic normal levels any time soon." The Bank of England has made it clear it won't even consider hiking interest rates until the jobless rate falls to 7 percent.