BoE's Bailey: rates will need to stay around current levels

LONDON (Reuters) - Interest rates in Britain will need to stay at current levels for some time and the Bank of England is vigilant to financial stability risks that might arise from that, Governor Andrew Bailey said on Wednesday.

"Rates are likely to need to remain at these levels for an extended period to bring inflation back to target on a sustained basis," Bailey said at a press conference after the BoE published its latest Financial Stability Report.

"The full effect of higher interest rates is yet to come through. Therefore we remain vigilant to financial stability risks that might arise."

Bailey added that the outlook for inflation was uncertain.

Earlier on Wednesday the BoE said British businesses and households had coped so far with higher interest rates but there were risks ahead for the financial sector from higher borrowing costs and changes to the way banks fund themselves.

(Reporting by William Schomberg, Huw Jones and Suban Abdulla; writing by Andy Bruce; editing by David Milliken)