Knightley: Rates could rise by November
Speaking at the myhomemove 2014 conference in Solihull Knightley said: “We could see a rate rise by November of this year; February is the latest they will go up.”
Knightley’s comments follow Bank of England governor Mark Carney’s move to dampen expectations of an imminent rate hike.
He said: “As time has moved on and the recovery has been sustained, the economy has edged closer to the point at which Bank Rate will need gradually to rise.
But he added: “Amidst the excitement that output is close to regaining its pre-crisis level we should not forget that the economy has only just begun to head back towards normal.”
Carney also added that interest rates will stay low for “some time”.
And Knightley agreed. At last year’s myhomemove conference he said that he did not think interest rates would go above 5% in his lifetime. This view remains unchanged.
He said: “I think there is going to be lower rates for longer than we would normally have thought.”
But he emphasised the importance of wage growth in both driving an interest rate rise and allowing people to cope.
He said: “We can’t really afford interest rate rises. That’s going to hit home pretty hard so it’s going to be a combination from the Bank of England for macro-economic policies, keeping lending under control and making sure there’s no bubbles coming through.
“But if wages rise interest rate rises will be more affordable.”