Bailey: Too Soon to Judge Market Bets on Four Rate Hikes

Bank of England Governor Andrew Bailey has pushed back on market expectations of aggressive monetary tightening, saying the economic outlook is too unpredictable to judge whether traders are right to price in almost four interest rate hikes over the coming year.

Speaking to broadcasters after the central bank left interest rates unchanged, Bailey said the prospect of four rate increases had not come up during the latest policy discussions. "We had a lot of discussion this time, and we did not discuss the prospect of raising interest rates four times," he said.

He acknowledged that markets must form their own view of the path ahead, but cautioned that conditions were simply too uncertain at present to validate such a trajectory.

The comments follow a pattern of Bailey occasionally weighing in on market rate expectations. In April he suggested markets were getting ahead of themselves by pricing in multiple hikes, and in July he stressed that a rate increase later in the year was far from certain.

Earlier in the day, the BoE set out fresh plans for unwinding its holdings of British government bonds. The approach halts sales of long-dated gilts entirely and pauses active sales for the next six months.

Bailey said conditions in the gilt market, where 30-year bond yields this week reached their highest level since 1998, had played no part in the announcement. "We were planning this work well before the conflict broke out in the Middle East, so it's not a reaction to market conditions at all," he said.

The central bank left rates on hold while warning of growing inflation pressure, setting the stage for continued debate over the pace of any future tightening.