Pound crashes as City labels Bailey an ‘unreliable boyfriend’ over interest rate decision
The pound tumbled yesterday as Bank of England governor Andrew Bailey came under fire for his botched handling of the latest interest rate decision.
Sterling was down 1.4 per cent against the dollar last night, at $1.35, after the central bank failed to hike rates as traders had expected.
Traders said Bailey should now be known as the ‘Grand Old Duke of Threadneedle Street’, as he had marched their expectations up and then let them down.
Pound slump: Sterling was down 1.4% against the dollar last night, at $1.35, after the central bank failed to hike rates as traders had expected
His predecessor Mark Carney was labelled the ‘unreliable boyfriend’ for his own mishaps guiding the market.
Experts expected the Bank to raise rates from a record 0.1 per cent to 0.25 per cent to tame rising inflation.
Bailey himself, along with other members of the rate-setting Monetary Policy Committee (MPC), had hinted that such a move was imminent.
But as the MPC revealed it was keeping rates at 0.1 per cent yesterday lunchtime, worried that a rise could put the brakes on the UK’s recovery, Bailey’s actions were branded ‘appalling’.
Gerard Lyons, former chief economic adviser to Boris Johnson during his time as Mayor of London, said the interest rate decision ‘reflects appalling signalling by the governor’.
Lyons added: ‘His comments and by not correcting how the market or the media interpreted them led to hawkish expectations… that was not merited.’
Michael Hewson, of CMC Markets, said the decision was a ‘huge own goal for the central bank’.
During a press conference, Bailey defended his position, saying neither he nor his colleagues had ever explicitly said a rate hike would come in November.
But Aaron Rock, investment director at asset manager Abrdn, said: ‘The press conference in particular must surely go down as one of the worst pieces of communication since the Bank of England gained independence in 1997.’