LONDON, Aug 1 (Reuters) - Bank of England Governor Mark Carney said on Thursday that interest rate expectations among investors were roughly in line with those of the central bank, once the market’s view on the likelihood of a no-deal Brexit is stripped out.
“The value of giving the guidance on the still most likely scenario - it’s become less dominant than previous, but the still most likely scenario - is so households and businesses know where it’s going,” Carney told reporters.
“And quite frankly markets know where it’s going and if you strip out their no-deal probability weighting, it’s basically where they expect it to.”
The BoE has long said it plans to raise borrowing costs in a gradual and limited way, assuming Britain can leave the European Union with a transition deal to soften the shock.
But investors have bet increasingly on the central bank’s next move being a rate cut because of the risk of a no-deal Brexit and the global economic slowdown.
Reporting by David Milliken and Costas Pitas; Writing by William Schomberg; editing by Stephen Addison