18.06.202611:19:15UTC+00UK 10-Year Gilt Yields Climb After BoE Holds Rates

UK 10-year gilt yields climbed to 4.78%, rebounding from two-month lows, as investors digested the latest monetary policy decisions from both the Bank of England and the US Federal Reserve, alongside the possible implications of the Makerfield by-election for Labour’s economic programme.

The Bank of England’s Monetary Policy Committee voted 7–2 to leave interest rates unchanged at 3.75%, underscoring persistent uncertainty about the economic impact of the Middle East energy shock. The BoE reiterated its determination to bring inflation under control, with Governor Andrew Bailey stressing that inflationary pressures linked to the Iran conflict remain in place despite the ceasefire and the prospect of a negotiated settlement.

The Committee forecast that inflation will pick up again later this year as broader cost pressures feed through the economy. However, it trimmed its projection for peak inflation in the final quarter of 2026 to 3.25%, down from 3.6%. The BoE’s announcement came after the Federal Reserve also opted to hold interest rates steady, though nine of the Fed’s 19 policymakers now expect at least one additional rate increase before year-end.