STOCK MARKET SNAPSHOT FOR 26/11/2021
Bank of England Governor Andrew Bailey said on Thursday that central banks took risks when they sought to provide guidance on what is likely to happen with interest rates during times of economic uncertainty.
Bailey, who has been accused by some investors of sending a wrong signal about the likelihood of a BoE rate hike earlier this month, told an event organised by the Cambridge Union that guidance was still a relatively new tool for central banks.
The BoE shocked financial markets on Nov. 4 when it kept Bank Rate on hold at its coronavirus pandemic low of 0.1%. Investors had read remarks made by Bailey in October as a signal that rates would rise at the BoE’s November meeting.
Speaking at Thursday’s event, Bailey said it had been relevant to state the BoE would not allow those inflation expectations to get out of control. “That’s not so much forward guidance as a reminder of where we are,” he said.
“The boundary between a commentary and guidance is quite murky, actually, when you think about the words we use,” he said.
The BoE’s December monetary policy decision is due to be announced on Dec. 16.
Source: Reuters (Reporting by William Schomberg; Editing by William Maclean and Jonathan Oatis)