Now is not the time for an interest rate hike - Mark Carney

On the stock market, the FTSE 100 index was up 22.84 points at 7,546.65 in early morning trade.

He said wage growth was too weak to justify a rate hike and added that members of the bank's Monetary Policy Committee were split on the issue, voting 5-3 to leave rates on hold last week.

Hammond said a final Brexit deal needed to include a comprehensive agreement on trade and services.

The uncertain outcome of the Brexit talks is also expected to weigh on consumers and companies.

Carney said that if there was insufficient progress on this, businesses in Britain and other European Union countries might soon start to activate their own Brexit contingency plans.

On Brexit, the governor told City bosses the country will soon "begin to find out the extent to which Brexit is a gentle stroll along a smooth path to a land of cake and consumption".

Carney admitted that since the Brexit vote the UK's economic prospects have dwindled but said that monetary policy "cannot prevent the weaker real income growth likely to accompany the transition to new trading arrangements with the EU". Carney voted to keep them at a record low 0.25 per cent and gave no sign he was in a rush to change his view.

He said uncertainty over the direction of the economy and "anaemic" wage growth meant that "now is not yet the time to begin" increasing rates.

However, Mr Carney said he thought a rate rise now would be premature.

"Now is not yet the time to begin that adjustment", he said.

"In the coming months, I would like to see the extent to which weaker consumption growth is offset by other components of demand, whether wages begin to firm, and more generally, how the economy reacts to the prospect of tighter financial conditions and the reality of Brexit negotiations", he added.

It came after inflation hit 2.9% in May - its highest level in almost four years and far higher than expected.

He also said that whether Britain's large current account deficit was sustainable remained an open question, "one whose answer depends crucially on the outcome of the Brexit negotiations".

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