Bank of England warns markets may not be ready for rate hike

 
Michael Bow
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THE BANK of England’s financial policy committee (FPC) is concerned that parts of the financial sector could be unprepared for eventual interest rate hikes, according to minutes of a meeting released yesterday.

During March’s meeting, the committee concluded that there is a risk that financial markets may be brushing off the potential for higher interest rates to impact the economy.

The FPC noted that markets had not reacted enormously to events in Ukraine, saying “apparent resilience” to such developments could “reinforce risk appetite in a way that did not fully take account of the eventual transition of monetary policy to more normal settings.”

The FPC went on to say that some parts of financial markets could be challenged if rates “adjust more abruptly than expected”.

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