Major: ‘No fast rise in interest rates’

Sir John Major

The UK is unlikely to rapidly raise interest rates despite the US decision to increase rates for the first time since 2006, Sir John Major has said.

The Federal Reserve has lifted US rates by 0.25 percentage points to 0.5%, potentially increasing pressure on the Bank of England to raise rates too.

But the former prime minister said he doubted the UK would do so “rapidly”.

“The Fed have just ticked up interest rates a little,” he said. “I think this will be a very slow process.”

UK rates have been held at 0.5% for more than six years.

“I don’t think we’re going to suddenly see a huge spiral in interest rates,” Sir John told the BBC’s Andrew Marr Show.

“I know many mortgage owners in particular will be concerned about that,” he added.

Bank of England governor Mark Carney has said rates will stay low “for some time”, with economists predicting the bank could raise them in late 2016.

Economic growth

However, Sir John said the UK economy was in better health than when he became prime minister 25 years ago.

Then interest rates were at 14% and inflation was nearly 10%, he said.

Next year the world economy, including that of Europe, will grow a “little faster”, Sir John predicted.

But he added: “I think three large economies will probably be in difficulty next year: Russia, Brazil and China will slow a little.”

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