The Governor of the Bank of England indicated on Thursday night that interest rates in the UK could begin to increase by the end of this year.
Mark Carney said that the decision to hike rates is likely to come into “sharper relief” before 2016.
Interest rates are currently set at 0.5%, a record low it’s been unchanged at for six years now.
The BoE wants the rate to slowly rise over the next few years to 2.5%.
Increasing rates will put pressure on borrowers as it means that they will have to shell out more to pay for credit card bills and mortgages.
However, the hike will come as a relief for those who want to save their money.
In a speech in Lincoln, Mr Carney said:
“The need for Bank Rate to rise reflects the momentum in the economy and a gradual firming of underlying inflationary pressures.”
“In my view, the decision as to when to start such a process of adjustment will likely come into sharper relief around the turn of this year.”
The bank rate, known in the US as the federal discount rate, is the rate at which the central bank lends money to commercial banks.
He said that the time to begin increasing rates is approaching as actions made by the central bank to cool the economy and prevent a surge in inflation would take at least a year and a half to take effect.
He said that rates “would proceed slowly”, giving some relief to borrowers who are enjoying the current record low rates.
He said that the BoE would implement a “feel its way as it goes” approach.