Carney: New normal for UK interest rates to be 2.5%

Bank of England Governor Mark Carney has said the 'new normal' for interest rates in the UK will be around 2.5%, a level he predicted they may reach by 2017.

Speaking to BBC Radio 4's Today programme Carney said a return to 'normal' interest rates of 5% is unlikely in the medium term. He said things have changed to the point it is almost impossible to raise rates to their pre-recession level. "The big picture is not whether the bank rate goes from 0.5% to slightly above that lowest ever level," he told the BBC. "That's not the big picture, the big picture is where interest rates go in the medium term, because if I am taking out a mortgage and if I am thinking of investing in a new plant, if I'm thinking about taking on new people. That'...