Markets still ahead of themselves in pricing rate hikes

Reuters Videos

Thu, April 2, 2026 at 12:01 AM GMT+7

STORY: :: Bank of England Governor Andrew Bailey says that markets are still ahead of themselves in pricing rate hikes:: London, England / April 1, 2026“I was very clear a couple of weeks ago. I mean, I used probably language that was probably a bit more direct than I normally do in saying, I think you’ve got ahead of yourself. Now, look, what I said a couple of weeks ago, and I haven’t really changed my position to be quite clear, is there was a reasonable expectation before any of this started that we would probably reduce rates once or twice more this year. I mean, I said it, so it was reasonable for people to expect it. I said a couple of weeks ago, I thought, look, honestly, at the moment, I think that’s off the table. But to go further than that and start speculating about us raising rates, I thought they were going ahead, you know, markets were getting ahead of themselves. I still think that. Now, what we’ve seen in the last two weeks is A, we’ve seen two things, A, a lot of volatility, clearly. I mean, we’ve had mornings and afternoons where that, you know, that expectation has moved around a lot, frankly. But sitting here today, obviously it’s come down. It’s still pricing us to raise rates. And I would still say, I think that is a judgment markets have to make, but I think they’re getting ahead of themselves in terms of that we will have to sit down again for the meeting coming up at the end of April, end of this month, and make that assessment as we do at every meeting. But I was very clear two weeks ago and I haven’t changed my position. The right thing to do two weeks ago is to hold. We will come back for the next meeting at the end of this month. And reassess that position, but I’m not going beyond that.” Bailey, speaking to Reuters at the central bank’s London headquarters, said the central bank would need to keep a clear focus on risks to growth and jobs as well as inflation when making its next decision on rates.Financial markets are currently pricing in two rate hikes by the BoE this year – and have previously priced in as many as four – while most economists polled by Reuters expect rates to stay on hold.Before the crisis, British inflation was on course to fall back to its 2% target and the BoE had said cutting rates further was likely. That changed dramatically with the start of the Iran war.Bailey said the BoE was looking at a sharp rise in inflation expectations “very carefully” but the message he had received from businesses was that they had limited ability to raise prices.

Hot topics

Finance

Marketing

Politics

Strategy

Hot topics

Finance

Marketing

Politics

Strategy

Markets still ahead of themselves in pricing rate hikes

Topics

Related Articles

Company

Headlines

Newsletter