BoE's Bailey: Markets getting ahead of themselves by pricing in rate hikes – Reuters

While speaking to Reuters at the Bank of England's (BoE) London headquarters on Reuters, BoE Governor Andrew Bailey argued that markets are getting ahead of themselves by pricing in interest-rate hikes.

Key takeaways

"We will have to act if appropriate but tackling source of energy price shock is most important."

"If we have prolonged high energy prices and supply disruption, it will strain many countries quite seriously."

"I'm very clear we need to return inflation to target in way that causes least damage to growth and jobs."

"We look at inflation expectations very carefully, but short-run often follows headline inflation."

"Businesses I speak to say they have a real lack of pricing power."

"UK growth is below potential, labour market softening."

"MPC may debate case for a precautionary rate rise, but need to judge that in context of remit and how to return inflation to target."

"Gilt market moves orderly but stretched, we're watching it hourly."

"Need to watch out for investor loss of confidence in private credit."

Market reaction

GBP/USD preserves its bullish momentum following these comments and gains more than 0.5% on the day near 1.3300.