Bailey Pushes Back Against Market Expectations for BoE Rate Hikes

Bank of England Governor Andrew Bailey pushed back against market expectations that interest rates will rise soon. In a hearing before lawmakers, Bailey emphasized that investors have priced in rate hikes beyond what's justified by current economic data.

'When you look at the market curve... they've got essentially a risk premium in there,' Bailey said.

He noted that while economic data since July has come in stronger than expected, he doesn't want to dispel the idea of a 'secret plan' for rate hikes. Bailey and three other Monetary Policy Committee members stuck to their existing positions ahead of the BoE's interest rate announcement on September 17.

Market expectations point to one quarter-percentage-point rate hike by the end of this year, with two more in 2027. Unlike the European Central Bank, which raised rates in June and is expected to do so again Thursday, the BoE has kept rates on hold since February.