Bank of England's Green: Market's Reduced Rate Hike Bets Reasonable

On April 15, Jin10 reported that Bank of England Monetary Policy Committee member Green stated that the market's reduction in rate hike bets is reasonable. Current pricing, which suggests two or fewer rate hikes this year, is considered 'broadly correct.' Previously, swap pricing had indicated more rate hikes due to the Bank of England's readiness to address inflation from the Iranian energy shock. Green noted that few expect four rate hikes, which was the peak pricing level, and the current adjustment is seen as appropriate. Green warned that even if the war ends immediately, the UK might face 'waves of small inflation surges' in the coming months. While businesses have already felt the impact of rising energy prices, consumers will only experience the pressure after the price cap adjustment in June. Disruptions in fertilizer supply could lead to increased food prices in six months. She expressed concern that rising energy prices could prolong inflation. Despite significant slack in the labor market, making a repeat of the 2022 second-round effects unlikely, the Bank of England will need time to gather conclusive data. 'There won't be concrete evidence for several months, and by the time we see it, it will be too late,' she said.