Interest Rate Rise 'Signals End Of Crisis'
A rise in interest rates is a sign the UK economy is emerging from a crisis period and is growing, George Osborne has argued.
The Chancellor sought to strike an upbeat note on the move which is set to see some people's mortgage payments go up, after Bank of England Governor Mark Carney gave a strong hint they may increase before the General Election next May.
In his first Mansion House speech since becoming governor, Mr Carney warned "gradual and limited" increases would be needed as the economy recovers.
The base rate has been stuck at 0.5% since 2009, but the strength of the recovery has heightened speculation about when rates will rise.
With the economy recovering faster than anticipated, analysts predict the interest rate hike could even come as early as this year.
The move will spell higher repayments on many mortgages linked to the Bank rate but will bring relief to hard-pressed savers who have been squeezed by it being left at 0.5% for more than five years.
"It could happen sooner than markets currently expect," Mr Carney said.
Mr Osborne said: "Well as the Governor of the bank indicated, inevitably interest rates will rise gradually.
"Of course when that happens is a decision for the independent central bank.
"But it is a signal that we are moving out of a period of economic crisis, that the British economy is growing, that jobs are being created, and homes are being built, and that's part of our economic plan."
In his speech, Mr Carney did say raising interest rates now would be the wrong response, reiterating that this would only be a "last line of defence".
"Fortunately, we are not up the proverbial creek without a paddle," he said.