House prices are at record highs. Consumer credit rose over 10% in the year to April. The household debt-to-income ratio is 140% not far off its historical highs. Asset markets are bubbling a bit. Pretty much everyone in the UK drives a new car paid for on the never-never. The savings ratio plumbs new depths. Inflation has just hit nearly 3% so anyone getting the base rate only of 0.25% on their savings is losing 2.75% of their money to inflation every year (before tax!). Worse, about a third of savings accounts pay under 0.25%. And academic papers are suggesting that low interest rates might be playing a nasty part in the UK's productivity problem.
So assume that you are in charge of the Bank of England (with a clear mandate to keep inflation at 2%) and you are old enough to remember what happened to the economy in 2007/2008. What do you do? To most of us the answer would be obvious. You'd recognise that most of the problems listed were a direct result of your policies and you'd raise interest rates. Sadly, you aren't in charge. Mark Carney is and he and his team don't seem to be quite ready to make the move.
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