LONDON, Sept 17 (Reuters) – Bank of England Governor Andrew Bailey said on Thursday the outlook was too unpredictable when asked whether markets were right to price in almost four interest rate hikes over the next year, adding that his officials had not discussed that.
“We had a lot of discussion this time, and we did not discuss the prospect of raising interest rates four times,” Bailey told broadcasters after the BoE left interest rates on hold but warned of mounting inflation pressure.
“Markets have to reach a view, but I would say this: I’m afraid the situation … is too unpredictable at the moment,” he added.
Bailey has sometimes been willing to comment on market rate expectations, for instance telling Reuters in April that markets were “getting ahead of themselves” by pricing in multiple rate hikes and in July stressing that a rate hike later in the year was far from certain.
Earlier on Thursday the BoE outlined new plans to wind down its holdings of British government bonds, halting sales of long-dated gilts entirely and pausing active sales for the next six months.
Bailey said conditions in the gilt market — where yields for 30-year bonds this week hit their highest level since 1998 — had not factored into its 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,” Bailey said.
(Reporting by Andy Bruce; editing by David Milliken)
