BoE not to hike interest rates to slow housing boom

Bank of England (BoE) Governor Mark Carney on Wednesday said that the British economy was returning towards "normal" but declared that the central bank had no plans to hike interest rates in the near future.

Many analysts are of the view that BoE should increase interest rates to tackle soaring property prices.

But, Mr. Carney declared yesterday that the central bank would not increase interest rates to slow London's housing boom, arguing that the housing crisis was created by shortage of home building.

He added that there were many other tools, such as tightening certain mortgage affordability requirements, which could be used to tackle soaring property prices.

Speaking on the issue, he said, "We do have a range of other tools. We have ability in tightening certain mortgage affordability requirements, to discipline underwriting."

In its latest quarterly inflation report, the central bank predicted that annual inflation rate would likely remain close to the government-set target of 2 per cent over the next 2-3 years.

The central bank also hiked its growth forecast for 2015. The bank said the country's gross domestic product (GDP) would grow 2.9 per cent in 2015, 0.2 per cent up from its previous estimate of 2.7 per cent.