UK 10-year gilt yields held above 5.4%, hovering near a 19-year high, as investors weighed easing oil prices against hawkish commentary from Bank of England officials. Brent crude prices retreated amid easing concerns over Middle East supply after US President Donald Trump ruled out military action against Iran before the November midterm elections, citing productive talks aimed at resolving the conflict.
On the monetary policy front, BoE Chief Economist Huw Pill warned that central banks must remain firmly focused on bringing inflation under control. MPC member Megan Greene cautioned that UK wage growth could reach around 3.5% in 2027, potentially sustaining inflationary pressures and strengthening the case for further interest rate increases. Governor Andrew Bailey likewise underscored the need for central banks to prioritise reducing inflation.
Market participants are currently pricing in a BoE rate hike in November, with the Bank standing out as the only major central bank yet to begin tightening monetary policy in response to inflationary pressures linked to the US–Iran conflict.
