FX.co ★ UK 10-Year Gilt Yield Falls as BoE Hints at Further Easing

The yield on the UK's 10-year gilt eased to 4.43% following the Bank of England's decision to keep interest rates steady, while hinting that a reduction in policy rates might be forthcoming. The decision to hold the Bank Rate at 4% was passed by a narrow 5–4 vote. This indicates that inflation is believed to have reached its peak. The closeness of the vote, where four members advocated for a 25 basis-point cut to 3.75%, was more dovish than anticipated by the markets, suggesting an increasing inclination toward lowering rates. The Bank of England stated that the threat of persistent inflation has diminished, yet the potential for weaker demand poses more significant downside risks, creating a more balanced outlook overall. Officials highlighted that if the trend of declining inflation persists, rates are expected to gradually decrease. However, they emphasized the necessity for additional evidence before committing to a consistent lowering of rates.