BoE's Bailey says markets are getting ahead of themselves on rate rises

BoE's Bailey says markets are getting ahead of themselves on rate rises

Bank of England's Stance on Interest Rate Expectations

LONDON, March 19 (Reuters) - Financial markets are getting ahead of themselves in expecting interest rate rises from the Bank of England, Governor Andrew Bailey said on Thursday, after rate hike expectations rose sharply following the central bank's decision to hold rates.

Bailey's Message to the Markets

"I would caution against reaching any strong conclusions about us raising interest rates.... Today we've given a very clear message. The right place to be is on hold," Bailey said in an interview conducted on a pooled basis for British broadcasters.

Market Reactions and Expectations

Financial markets on Thursday were pricing in two quarter-point interest rate rises over the course of this year, reflecting an overnight surge in energy prices and the BoE's statement that it no longer saw scope to cut rates in the immediate future.

Clarification on BoE's Position

Bailey said the BoE's shift in position should not be over-interpreted.

"None of us know how this is going to play out. I think therefore the appropriate thing is to hold (interest rates) at this point. That, of course, is a change in the stance," he said.

Future Outlook and Uncertainty

"I don't think it's appropriate to say at this point - because of the uncertainty - whether we'll be raising rates or holding rates thereafter. Frankly, we're going to have to look at this very carefully, continuously," he added.

(Reporting by David Milliken and Andy Bruce; editing by William James)