30.04.202611:10:41UTC+00UK Gilt Yields Ease After BoE Holds Rates

UK 10-year gilt yields declined to 5% after the Bank of England left its Bank Rate unchanged at 3.75% by an 8–1 majority, in line with expectations. The BoE said that interest rates are now at a “reasonable place” and reiterated that it “stands ready to act as necessary” to ensure CPI inflation returns to the 2% target over the medium term. However, it warned of a material risk of second-round inflation effects and noted it will “continue to monitor closely” developments in the Middle East and their potential impact on global energy supply and prices.

The decision followed the Federal Reserve’s move to keep rates on hold, though the Fed meeting highlighted growing internal divisions: four officials dissented for the first time since October 1992, with three objecting specifically to the Fed’s signal of eventual rate cuts. Meanwhile, Brent crude gave up earlier gains, easing some immediate inflation concerns.

UK government bonds endured another challenging month in April. Benchmark 10-year gilt yields climbed by nearly 15 basis points to above 5%, although the move was less pronounced than the surge seen in March.