by David Milliken and William Schomberg
LONDON (Reuters) – The Bank of England may have already come to the end of its rate hike cycle, its governor, Andrew Bailey, said on Wednesday, adding it was too early to be certain of the trajectory. future monetary policy.
The BoE raised its benchmark rate to 4% last month but hinted it was close to ending its hike as inflationary pressures showed signs of easing.
“At this stage, I would be wary of suggesting that we are done with raising the base rate or that we will inevitably have to do more,” Andrew Bailey told an event hosted by consultancy Brunswick Group. “A further increase in the bank rate may prove appropriate, but nothing is decided,” he added.
In reaction to these declarations, the financial markets slightly revised down their expectations of a rate hike of a quarter of a point on March 23 and now estimate the probability of a status quo at 5%.
They still anticipate at around 70% the possibility that the rate will be increased to 4.75% in the second half.
The pound widened its losses against the euro and the yield on British two-year bonds fell to the lowest since February 10 at 3.575%.
“It is clear from Andrew Bailey’s speech that the committee is more focused on the significant monetary tightening that has already taken place and that it wants to end its upward cycle as soon as possible,” said Samuel Tombs, chief economist. at Pantheon Macroeconomics, which expects the rate to remain unchanged after the next meeting.
Andrew Bailey said the economy has evolved as expected since the BoE raised its rate on Feb. 2.
“Inflation was slightly lower, activity and wages slightly stronger, although I emphasize ‘slightly’ in both cases,” he said.
(With Andy Bruce, French version Laetitia Volga, edited by Jean-Stéphane Brosse)
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