Mark Carney warns that UK interest rates could rise sooner than expected
Bank of England governor Mark Carney has warned that interest rates could rise sooner than expected.
A rate rise would be welcome news for insurers, who have suffered poor returns from their bond-heavy investment portfolios in recent years because of persistently low interest rates.
But a rise would cause insurers short-term pain because it would devalue the bonds currently in their portfolios.
According to the Financial Times, the financial markets currently expects interest rates to rise above their current 0.5% level in spring 2015.
But in a speech at Mansion House last night Carney said that the first rate rise “could happen sooner than markets currently expect”.