Bank of England Governor Mark Carney said the interest rates in the U.K. could rise sooner than investors expect. There is already great speculation about the exact timing of the first rate hike and this decision is becoming more balanced, Carney said at the annual Mansion House speech in London on Thursday. Growth has been stronger and unemployment has fallen much faster than anticipated. He added that policymakers have no pre-set course and the ultimate decision will be data-driven. At this point, it is safest to conclude that there remains scope for spare capacity to be used up before policy is tightened and that a host of labor market, capacity utilization and pricing indicators should be watched closely to determine how that slack is evolving. "And a challenge in deciding when to begin normalising policy is that actual output can be observed but potential supply cannot," Carney said. "That is why the MPC is monitoring a broad range of indicators including coincident ones such as the behaviour of wages and price." Further, on housing market, Carney said the underlying dynamic of the housing market reflects a chronic shortage of housing supply, which the BoE cannot tackle directly. He emphasized that the bank does not target asset price inflation in general or house prices in particular. Carney warned that rapid growth in or high levels of mortgage debt can affect the stability of the economy as a whole.