LONDON: Bank of England Governor Mark Carney said it was possible that British interest rates will be higher in a year鈥檚 time, although the central bank would not raise them too soon and risk slowing the economy.
Speaking a day after the BoE cut its forecasts for British economic growth, Carney said British inflation could turn negative imminently, and that the strength of sterling was dampening economic growth slightly.
Asked in a BBC radio interview if record low interest rates were likely to be higher by this time next year, Carney said: 鈥淚t鈥檚 possible, but it depends on the evolution of the economy.鈥�
鈥淲hat we鈥檙e not going to do is put up interest rates too soon or too fast and slow the economy.鈥�
Wednesday鈥檚 quarterly economic outlook from the BoE cautiously backed bets in financial markets that it will only start to raise interest rates in around a year鈥檚 time.
Carney told the BBC that the central bank thought inflation may turn negative 鈥渘ext month,鈥� albeit only briefly, before rising again by the end of the year.
He added that Britain鈥檚 economy would continue to face headwinds from the weak global economy, the government鈥檚 fiscal policy and the strength of sterling 鈥� which on Thursday hit a six-month high against the dollar.
鈥淲e get a bit of a dampening (on growth) from the currency, the strength of the currency,鈥� Carney said.
Interest rates, which have stood at a record low 0.5 percent since early 2009, are more likely to move up than down, and will rise in a gradual and limited manner, Carney reiterated.
The BoE governor also told the BBC it was important that the British government provide clarity on how it will proceed with a planned referendum on the country鈥檚 membership of the European Union.