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.



News Stream
UK Gilt Yields Climb Amid Inflation Concerns
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.
2026-03-05
UK Gilt Yields Retreat Amid Middle East Tensions
The UK 10-year gilt yield fell back below 4.4% on Wednesday, after spiking over the previous two sessions due to fears that the Middle East conflict could push inflation higher. On Tuesday, yields jumped as much as 22 basis points, finishing 9 basis points higher on the day. Rising oil and gas prices have increased global inflation risks, prompting investors to scale back expectations for Bank of England rate cuts. Markets now price only a 20% chance of a cut this month, down sharply from 75% last week, and foresee just a 25-basis-point reduction in borrowing costs this year. Investors also absorbed downgraded growth forecasts from Chancellor Rachel Reeves. The Office for Budget Responsibility cut 2026 UK growth to 1.1% from 1.4% in November, before accounting for potential energy shocks. However, projections for 2027 and 2028 were raised to 1.6% in both years, alongside forecasts for lower borrowing and subdued inflation.
2026-03-04
UK Gilt Yields Jump as BOE Rate Cut Expectations Slide
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.
2026-03-03