BoE’s Bailey: Market Curve Prices Further Tightening, Reflects Risk Premium

Cointime update: Bank of England Governor Andrew Bailey said the market curve has priced in further policy tightening next year, but this mainly reflects risk premium rather than market expectations for interest rates, and is partly justified by energy risks. Bailey said recent oil price declines are positive news, and that further increases in the benchmark rate may be necessary unless progress is made in resolving the conflict. Positive developments in the Iran conflict would reduce the risk of a further rise in inflation, potentially leaving the CPI peak “slightly below” 5%.