Mark Carney has warned interest rates could rise 'sooner than expected'.
In his first Mansion House speech since becoming governor of the Bank of England, Carney (pictured) acknowledged there was 'already great speculation about the exact timing of the first rate hike' and that the decision was 'becoming more balanced'.
Interest rates have been rooted at a historic low of 0.5% since 2009 and previous Bank commander Mervyn King used everything in his power to battle the financial crisis.
In their forecasts economists had penciled in a rise at some point in the first half of next year on the back of the economic recovery and rising house prices.
Carney stressed there was 'no pre-set course' on when to raise rates as he highlighted that there was more spare capacity in the economy that would have to be used up first.
He also indicated rate rises would be measured. 'We expect that eventual increases in Bank rate will be gradual and limited.'
However, he said raising rates right now would be a mistake, saying a move would only be a 'last line of defence...fortunately, we are not up the proverbial creek without a paddle.'