UK bond yields rise after BoE hikes rates and signals more increases possible
TLT•British government bond yields rose after the Bank of England raised rates for the first time since 2023 and signalled at least one more increase could follow if the US-Iran war continues. Traders priced in about 76 basis points of further tightening by the end of 2027, up from roughly 67 before the decision.
1. Yields rise after decision
UK government bond yields rose as traders increased bets on further rate hikes after the Bank of England raised borrowing costs for the first time since 2023. The Monetary Policy Committee voted 8-1 to raise rates; Catherine Mann dissented in favor of a 50-basis-point increase. Ten-year gilt yields were last up 1 basis point at 5.148%, while traders priced in around 76 basis points of further tightening by the end of 2027, compared with roughly 67 basis points before the decision.
2. Bank signals conditional path
Governor Andrew Bailey said the increase should not be seen as the start of a sequence, but that another increase seemed likely unless the Middle East conflict was resolved. The pound was little changed at $1.347, and the FTSE 100 was up 0.7%. Oil prices had fallen around 17% during the week as markets bet the US midterm election would increase pressure on President Donald Trump to end the conflict.
