Bank of England's Carney says now not the time to raise rates

Britain to hold 2-year legislative session

Britain to hold 2-year legislative session

The pound dropped to a one-week low and took out the $1.27 level on Tuesday after Bank of England Governor Mark Carney ruled out an imminent rate increase.

Speaking to London's banking community alongside finance minister Philip Hammond a day after Brexit talks started, Carney cited weak wage growth, mixed signals on consumer spending and business investment as reasons for not moving to raise interest rates any time soon.

The Mansion House event planned for last week was delayed due to the fire in London and replaced by a breakfast event today.

The pound lost nearly a cent against the dollar to $1.2694, as the text of a speech due to be delivered by Carney last week showed he would like to see consumption and wages strengthen before the Bank of England hikes rates.

The Chancellor, Philip Hammond, spoke alongside Carney, noting that Brexit negotiations should include a transitionary period in which the United Kingdom will be outside the customs union but will still abide by customs union rules.

"In the coming months, I would like to see the extent to which weaker consumption growth is offset by other components of demand, whether wages begin to firm, and more generally, how the economy reacts to the prospect of tighter financial conditions and the reality of Brexit negotiations", he added.

As Brexit negotiations unfold, the United Kingdom economy will be influenced by the expectations of domestic consumers, firms, and markets about any transition period and what will happen in the longer term, Mr Carney said.

"Before long, we will all begin to find out the extent to which Brexit is a gentle stroll along a smooth path to a land of cake and consumption", he said.