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UK bond yields rise after BoE hikes rates and signals more increases possible

By Reuters News

LONDON, Nov 5 (Reuters) - British government bond yields rose on Thursday after the Bank of England raised interest rates for the first time since August 2023 and signalled at least one more increase was likely if the US-Israeli war on Iran continues.

Britain’s benchmark 10-year bond yield climbed and was last up 2 basis points (bps) at 5.154%, having traded around 2 bps lower before the decision.

Traders raised their bets on more BoE rate hikes, pricing in around 74 bps of further tightening by the end of 2027, compared to roughly 67 bps before the decision.

The pound was little changed on the day at $1.347, while Britain's FTSE 100 stock index .FTSE marginally trimmed gains to trade 0.7% higher.

Eight of the nine members of the BoE's Monetary Policy Committee voted to raise interest rates by 25 bps from 3.75% to 4%, with Catherine Mann voting for a bigger 50-bp increase.

Officials were responding to a rise in energy prices that pushed up inflation more than expected in September to 3.5%, well above the Bank's 2% target.

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