The UK 10-year gilt yield has fallen to 4.455%, marking a nine-week low following remarks from Bank of England Governor Andrew Bailey during a panel discussion in Sintra. Bailey indicated that the trajectory for interest rates is "downwards," suggesting that the level of restrictiveness will gradually ease towards a "more neutral" stance over time. Despite this, the terminal rate remains uncertain. He emphasized that UK inflation is predominantly influenced by administered prices rather than supply-demand imbalances and pointed to initial signs of economic and labor market slackening. In response, traders are now anticipating a 25 basis point rate cut in September. Nevertheless, the Bank of England remains more cautious in its approach to easing policy compared to institutions like the European Central Bank. On the domestic front, a significant welfare reform vote has captured attention, as it could challenge the unity within the Labour government. Prime Minister Keir Starmer has moderated proposed benefit cuts in response to strong opposition from within his party, which prides itself on defending the welfare state.