UK Gilt Yields Climb Amid Inflation Concerns

2026-03-05 08:34 By Joana Ferreira 1 min. read

The UK 10-year gilt yield climbed back to around 4.4%, its highest level since February 12, as investor attention returned to inflation risks amid the escalating conflict in the Middle East, now entering its sixth day.

The resulting surge in oil and gas prices has heightened global inflation concerns, prompting investors to scale back expectations for interest-rate cuts by the Bank of England.

Markets now assign only about a 20% probability of a rate cut this month, and anticipate only a single 25-basis-point reduction in borrowing costs over the course of the year.

Meanwhile, the Office for Budget Responsibility lowered its forecast for UK economic growth in 2026 to 1.1%, down from 1.4% projected in November, even before factoring in potential energy-price shocks.

However, growth projections for 2027 and 2028 were revised upward to 1.6% in both years, alongside expectations for reduced government borrowing and more moderate inflation.



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