"The Bank is well aware that a prolonged period of historically low interest rates could encourage other risks to develop. In the UK, the biggest risks are associated with the housing market, which is why last spring the Bank took graduated and proportionate actions."
- Mark Carney, Bank of England Governor
According to new data from Confederation of British Industry, retail and wholesale sales are rising on a slower pace than in the previous month; however, they are still strong enough to support economic growth at levels seen in previous quarters. The CBI diffusion index decreased to 31 points in August, down from 37 a month before. At the same time, economists predicted the indicator to reach 34 points mark. Reading above zero indicates expansion in retail sales and consumer spending across the United Kingdom, and points on optimistic sentiment among retailers. The survey took place, asking 150 biggest retail and wholesale companies about their assessment of sales' volume.
On Thursday, the Bank of England Governor Mark Carney, giving a speech in Wales at Insurance Conference, said that regulator understands awareness about too long period of low interest rates in the U.K. Due to comfortable interest rates' climate, many risks are coming from fast-growing housing prices, therefore the BoE took necessary actions to avoid bubble on the market. Major banks are also under the risk of underestimating potential consequences of fast-rising home prices. Mentioning insurance industry, Mr. Carney added that this sector is important for British economy, as it contributes 25 billion pounds to annual GDP growth and employs over 300,000 people.
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