Bank of England's Mark Carney speaks at the University of London 19 January 2016

  • Journey to UK policy normalisation is still young
  • There is no set timetable
  • We'll do the right thing at the right time but now is not the time to hike
  • Before raising rates we need above trend growth, faster domestic cost growth and core CPI notably nearer 2% target
  • Collapse in oil prices means UK inflation likely to stay very low for longer
  • UK has a tighter fiscal stance and greater exposure to global weakness than the US
  • Strong exchange rate and subdued global price pressures will drag on inflation
  • Sees risks of financial contagion from challenges in China and other EM's
  • UK's natural rate of unemployment may be lower than previously thought
  • Must be vigilant for signs that low headline inflation is pushing down wage deals

A very dovish stance from Carney and he's also placed some specific targets on what needs to be done. The pound has lost out on the comments but the headline comment isn't really unexpected

Given the way things stand right now, seeing above trend growth anytime soon may be a long way away

The comments also pave the way to see forecasts lowered at the next inflation report which is next month

Naturally the pound has taken a slap round the chops and we'll need to keep an eye on the 1.4230 support once again. If today's rally stands any chance I'll be looking for buyers to protect the lows somewhere around 1.4245/50. At the moment 1.4260 is doing that job

Reading through the speech it's not all as gloomy as the comments above. The gist is that the BOE have put the foundations in place to see the UK domestic economy recover further and that the main risks are internationally driven

The headline is part of an elaboration on his comment last year;

"Last summer I said that the decision as to when to start raising Bank Rate would likely come into sharper
relief around the turn of this year.
Well the year has turned, and, in my view, the decision proved straightforward: now is not yet the time to
raise interest rates. This wasn't a surprise to market participants or the wider public. They observed the
renewed collapse in oil prices, the volatility in China, and the moderation in growth and wages here at home
since the summer and rightly concluded that not enough cumulative progress had been made to warrant
tightening monetary policy."

It's worth reading the speech to get a better grasp of context on the headers above