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Mark Carney refused to respond to market speculation that the Bank of England is likely to raise interest rates as soon as May during his press conference on Thursday, but the BoE governor did suggest he is increasingly satisfied with the way markets have been responding to recent economic developments.

The UK’s currency and government bond yields both jumped after the release of the latest Inflation Report, in which the Bank said monetary policy “would need to be tightened somewhat earlier and by a somewhat greater extent” than previously anticipated.

Several analysts have suggested the comments point toward May as the most likely time for a next rate rise, and the implied probability of a hike in May has climbed from less than 40 per cent before the report to over 60 per cent this afternoon.

Mr Carney said “what we don’t want to do is …take away that natural formation of expectations because the market [now] understands better the trade-off we’re trying to manage”.

He said that until around last September, investors “weren’t responding to underlying data” as many “had formed an opinion that it was impossible that rates would adjust” given the uncertainty created by Brexit. However, he added that “what’s happened since the fall is that the market has responded much more”.

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