Sir Edward George, governor of the Bank of England, said that spending levels in the medium term were unsustainable, and a credit card boom may need to be headed off.
Speaking in an interview with the BBC television's World Business Report George said: "Consumer demand will have to moderate. I think there is a good possibility that it will begin to moderate of its own accord."
He continued: "[When] I say moderate, I don't mean it falls off a cliff, but it slows down,"
George said that the best outcome would be a natural slowdown, and for market forces to quell the trend, but warned that if it did not happen then interest rates will rise.
The announcement follows the news that house prices rose again at the end of the year, which heightened concerns that the economy was becoming out of step with the retail industry, although George was confident that the UK will not enter a recession.
