The governor of the Bank of England revealed that his surprise comment about interest rates last month was designed to puncture the complacency of markets and reduce the risk of a destabilising 1994-style bond market crash.
Giving evidence to the Treasury select committee, Mark Carney said his Mansion House speech, in which he said the base rate could rise sooner than markets expect, was to nudge market participants into recognising they were taking more risk than they thought.
“We were concerned that the markets were not reacting to . . . a fairly long run of data that was as good as expected, if not slightly better,” he said, adding that markets had not adjusted to the possibility that the first rise in the rate