UK Interest Rate Hike Depends on Income, Wages and Jobs

The Bank of England has revealed that it will analyse income and wages before deciding to hike up interest rates, despite previously saying that unemployment falling to a 7% threshold would trigger an increase.

According to a TV interview with Mark Carney, the BoE governor said it would only hike rates if data showed that the economy was operating near full capacity.

"The path of monetary policy, the path of interest rates is going to be calibrated very carefully to ensure that only when we see sustainable growth in jobs, in incomes and in spending, will we make adjustments," said BBC.

"We can responsibly take our time and only adjust interest rates once more slack has been cut.

Only a few days ago, Carney revealed that the BoE would not hike rates in the near future, despite UK employment falling by its fastest pace since 2007.

The BoE had previously been working to a forward guidance policy of the unemployment rate falling to a 7% threshold, at which point it would consider lifting its base rate from the record-low of 0.5%.

Unemployment has fallen sharply amid an emerging recovery in the UK economy, which saw GDP growth of 1.9% across the whole of 2013.

The Office for National Statistics (ONS) said the unemployment rate fell to 7.1% in the three months to November and the BoE thinks this has fallen further at the beginning of 2014. It now predicts it to hit 6.5% by 2015.

"The recovery as yet is neither balanced nor sustainable," Carney said at a press conference launching the report, at the time.

"A few quarters of above trend growth driven by household spending are a good start but they aren't sufficient for sustained momentum."

Carney also added in the interview that he is concerned over the UK housing market.

"It's still pretty small, it's all outside of London, it's for lower-priced houses, as a whole it's mainly with first-time buyers, so it's not driving the housing market, but we have a responsibility to watch it," said Carney, on the effect that a government scheme to aid home-buyers, Help to Buy, was not a major factor has on boosting prices.