Sept 8 (Reuters) – Bank of England Governor Andrew Bailey said the market curve for interest rate expectations reflected investors adding a “risk premium” because of their worry about further energy price increases.
Bailey told lawmakers from parliament’s Treasury Committee that the central bank’s analysis showed investors were pricing in additional tightening in policy, on top of what could be explained by expectations for BoE policy moves alone.
“When you look at the market curve, and when you break the market curve down as far as we can do … they’ve got essentially a risk premium in there,” Bailey told lawmakers from parliament’s Treasury Committee.
Bailey added that he wanted to dispel the idea that a rate hike from the Bank of England was a question of “when” rather than a possibility that hinged on developments in the economy.
“What I want to dispel is the idea that we’ve really got a secret plan, we know where we’re going to go to and it’s unconditional.”
(Reporting by David Milliken and Sam Tobin, writing by Andy Bruce, editing by William James)
