UK Gilt Yields Jump as BOE Rate Cut Expectations Slide

2026-03-03 13:19 By Joana Ferreira 1 min. read

The UK 10-year gilt yield surged to 4.5%, as markets scaled back expectations of a Bank of England rate cut in March amid ongoing inflation concerns.

The two-year gilt rose above the 3.8% mark, its highest since December 29 and on track for its biggest daily jump since April 2025.

Rising oil and gas prices driven by the Middle East conflict have heightened the risk of global inflation, prompting investors to reassess rate-cut prospects across major central banks.

Markets now price only a 20% chance of a BOE cut this month, down sharply from 75% last week.

Investors also absorbed Chancellor Rachel Reeves’ downgraded growth forecasts.

The Office for Budget Responsibility (OBR) cut UK growth for 2026 to 1.1%, from 1.4% in November, before accounting for potential energy shocks.

Growth projections for 2027 and 2028 were raised to 1.6% in both years, while the OBR also forecast lower borrowing and subdued inflation.



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