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BoE's Bailey: Path of interest rates will not be particularly different due to budget

BY Reuters | ECONOMIC | 11/07/24 07:56 AM EST

LONDON, Nov 7 (Reuters) - Bank of England Governor Andrew Bailey said on Thursday he did not think that the path of interest rates would be "particularly different" due to last week's budget - the Labour government's first since it came to power in July.

Bailey's comments came after the Bank of England cut interest rates for only the second time since 2020 and said future reductions were likely to be gradual, as it saw higher inflation and economic growth after the budget.

"I don't think that it's sensible to conclude that the path of interest rates will be particularly different," Bailey told a news conference, when asked about the budget's impact on rates. (Reporting by Andy Bruce and David Milliken; Writing by Catarina Demony; Editing by William James)

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In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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