King calms interest rate worries

He labelled inflation expectations “not of serious concern yet”, although many people already fear an interest rate rise that could push them further into debt.

His comments may fuel speculation that the governor is reluctant to increase interest rates from their current 4.5 per cent level in the immediate future. This is despite expectation that the monetary policy committee will raise the rate later this year, with one member this month already voting for a rise in the rate.

Other major economies have raised their interest rates this year, forcing up the amount that people on linked mortgages and loans have had to repay each month.

With more monthly debt to service, experts are already warning borrowers to start preparing for these extra payments.

While not ruling out a rise in the rates and pointing to “volatile” fuel prices, Mr King did add that inflation was currently around the two per cent target.