Sterling plummets as Bank of England governor Mark Carney says now is not the time to raise interest rates

 
Emma Haslett
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Mark Carney Delivers A Speech On The Globalisation Of Financial Services
Carney said he wanted stronger economic data before the Bank of England raises interest rates (Source: Getty)

Sterling plummeted to its lowest in a week as the governor of the Bank of England rejected calls for an interest rate rise in a long-awaited speech.

The pound lost almost a cent against the dollar to $1.2694, as the text of a speech due to be delivered by Carney last week showed he would like to see consumption and wages strengthen before the Bank of England hikes rates.

"From my perspective, given the mixed signals on consumer spending and business investment, and given the still subdued domestic inflationary pressures, in particular anaemic wage growth, now is not yet the time to begin [an] adjustment [in monetary policy]," said Carney.

"In the coming months, I would like to see the extent to which weaker consumption growth is offset by other components of demand, whether wages begin to firm, and more generally, how the economy reacts to the prospect of tighter financial conditions and the reality of Brexit negotiations."

Carney's speech, which was supposed to be delivered at a banquet at Mansion House on Thursday but was put off out of respect for the victims of the Grenfell Tower blaze, came shortly after three of the eight members of the hitherto decidedly dovish monetary policy committee voted to raise interest rates.

Keeping clearing in the capital

The governor also mounted a robust defence of London's euro clearing market, which has come under threat after the result of last year's Brexit vote.

Carney said moving euro clearing out of the capital will "split liquidity between a less liquid onshore market for EU firms and a more liquid offshore market for everyone else".

Read more: Germany and France eye-up euro clearing market after Brussels proposals