Bailey, along with BoE Deputy Governor Ben Broadbent and Monetary Policy Committee members Swati Dhingraile and Megan Greene, answered questions from members of the Treasury Committee in the British Parliament.
Emphasizing that full employment in the British economy is positive news, Bailey said, “We assess that the economy is already showing clear signs of an upswing.”
Stating that it is not “irrational” for markets to price in a rate cut from the BoE this year, Bailey said, “The market basically embodies in the curve that we will cut interest rates this year. We don’t endorse the market curve, we don’t make a prediction about when or how much we will cut (rates). It is not unreasonable for the market to assess the declines in borrowing costs.”
On the other hand, while the British economy shrank by 0.3 percent in the October-December period last year, it had contracted for the last two quarters and entered a technical recession.
