Pound Jumps on Carney Remarks About Timing of Rate Hike

FRANKFURT, Germany (AP) -
Pound, Jumps, Carney, Rate Hike
Bank of England Governor Mark Carney speaks during the Bank of England’s financial stability report on Tuesday. (Jonathan Brady/Pool via AP)

The battered British pound rose sharply after the head of the Bank of England made remarks that could be seen as bringing an interest-rate increase closer.

The pound traded 1 percent higher on the day at $1.2938.

The pound’s value against the U.S. dollar jumped after the Bank of England governor, Mark Carney, said in remarks prepared for a conference in Sintra, Portugal, that an improving economy meant the central bank would be less tolerant of above-target inflation. Central banks use rate hikes to fight inflation.

He also said that “some removal of monetary stimulus is likely to become necessary” as growth reduces spare capacity in the economy.

The pound has sagged since Britain’s decision to leave the European Union, boosting inflation by raising import prices.