18.12.202512:16:33UTC+00UK Gilt Yields Fall After BoE Decision

The yield on the UK's 10-year government bonds (gilts) has decreased to just below 4.49%, marking the lowest level in approximately two weeks. This decline follows the Bank of England's decision to reduce the bank rate by 25 basis points at its final meeting of the year, a move that was widely anticipated. The voting pattern met expectations, with a 5–4 split, and Governor Andrew Bailey supporting the rate reduction this time around. Policymakers emphasized their commitment to a "gradual" approach to further easing, while also noting that forthcoming decisions would require careful consideration. Financial markets are currently factoring in approximately 62 basis points of easing from the central bank by the end of next year, compared to around 66 basis points prior to the announcement. This rate reduction—coming after the Bank's pauses in September and November—occurs amidst diminishing inflation and increasing signs of economic stress. In November, the UK's annual inflation fell to 3.2%, its lowest in eight months and below the Bank of England's forecast of 3.4%. Concurrently, the GDP contracted for the second consecutive month in October, and private sector wage growth persisted in its moderation.