Mark Carney to defend plan to freeze interest rates

New Bank of England governor Mark Carney is expected to hammer home plans not to raise interest rates for at least three years amid growing market scepticism.

Mr Carney will give a speech in Nottingham on Wednesday when he is expected to reaffirm the bank’s commitment not to raise rates from their record low of 0.5% until more than 750,000 new jobs have been created.

Mr Carney unveiled the new policy of “forward guidance” earlier this month, when he said rates will not rise until unemployment has fallen to 7% from its current 7.8% level which the bank does not expect until late 2016.

But markets are increasingly sceptical about how long rates can remain at rock bottom as the recovery gathers pace.

Since forward guidance was introduced, gilt yields have risen to drive up the cost of Government borrowing, while the pound has strengthened, as markets increasingly price in an earlier rate rise.

The Canadian central banker will address an audience from the CBI East Midlands, Derbyshire and Nottinghamshire Chamber of Commerce and East Midlands Institute of Directors, before giving a press conference.