Gilt yields climb as Bank is tipped for first rise since 2023
The ten-year gilt yield rose back above 5.2% on Tuesday, recovering from near two-month lows before Thursday’s Bank of England decision. Economists polled by Reuters expect Bank Rate to rise from 3.75% to 4%, its first increase since August 2023, with a 7–2 vote. The FTSE 100 fell 1.1% to 10,638 in a global sell-off.
Inflation reached 3.5% in September against the Bank’s July forecast of 3.0%, driven by the war’s fuel shock. “Their hands are increasingly being forced, whether they like it or not,” said Stefan Koopman of Rabobank. Markets price three to four more quarter-point rises in 2027, which could take Bank Rate to between 4.75% and 5%. Oxford Economics expects the minutes or Andrew Bailey to signal the peak will be lower. The Bank will also give its first assessment of John Healey’s budget; the decision is due at 12:00 GMT.