UK bond yields rise after BoE hikes rates and signals more increases possible
TLT•UK government bond yields rose after the Bank of England raised its policy rate by 25 basis points to 4% and signalled another increase was likely if the US-Israeli war on Iran continues. Traders priced in about 74 basis points of further tightening by the end of 2027, up from 67 before the decision.
1. Yields and rate bets rise
Britain’s 10-year government bond yield rose 2 basis points to 5.154%, after trading about 2 basis points lower before the Bank of England’s decision. Traders raised their bets on further rate increases, pricing in around 74 basis points of tightening by the end of 2027, compared with roughly 67 basis points beforehand.
2. BoE raises policy rate
Eight of the nine members of the Monetary Policy Committee voted to raise rates by 25 basis points, from 3.75% to 4%. Catherine Mann voted for a larger, 50-basis-point increase. Officials responded to higher energy prices, which pushed inflation above expectations to 3.5% in September, well above the Bank’s 2% target.
3. Other markets little changed
The pound was little changed at $1.347, while the FTSE 100 trimmed its gains slightly to trade 0.7% higher.
