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- Howard Archer, an economist at IHS Global Insight
Mark Carney, the Bank of England Governor, hinted that the central bank may start raising interest rates next spring if the labour market continues to perform strongly. Carney said that if rates started to increase in spring 2015, inflation would be set to settle around the BoE's 2% goal in three years' time. Britain's economy has been recovering at a surprisingly fast pace since mid-2013, bringing down the jobless rate sharply and raising prospects of the BoE lifting borrowing costs ahead of the U.S. Federal Reserve. Should the BoE raise its benchmark interest rate early next year, the bank would likely become the first major central bank to start to remove the unprecedented stimulus provided to the economy since the financial crisis hit in late 2008. Majority of investors expect the BOE to raise its benchmark interest rate from a 320-year low of 0.5% in the first quarter of 2015, but Carney stressed there was no concrete timetable.
However, experts are warning that the potential impact of Scottish independence on the U.K. economy could see the Bank of England pulling back on plans for monetary policy normalization and reduce the likelihood of an imminent interest rate hike. As the referendum is looming, economists are getting more concerned over the potential impact the "Yes" vote might have on the future of the U.K.'s economy, which currently is impossible to forecast.