In a session some analysts called chaotic, rate futures showed a 55% chance that the Bank of England will have to raise interest rates.
Investors bet on Thursday that persistent inflation will force the bank of england to raise the interest rate to 6.5% in December, its highest level in 25 years, driving the 10-year gilt yield to its highest level since 2008.
In a session that some analysts described as chaotic, rate futures showed a 55% chance that the Bank of England will have to raise rates from the current 5% to 6.5% by the end of the yearand the probabilities increased to close to 80% by March 2024.
LThe financial markets expected a maximum of 6.25%.
This way, longer terms were just as affected as shorter oneswho were the most impacted by previous sales.
The fall on Thursday was more pronounced than that of public debt in other countries Europeans and the United States, which were affected by data showing that US private payrolls rose much more than expected in June.
The Bank of England stated in June that it had “greater persistence in the inflationary process” by raising interest rates by half a percentage point more than expected, and sustained the selling of UK government bonds that began in May.
“Investor expectations for future Bank of England hikes have become more aggressive in recent days”wrote the strategists of Deutsche Bank in a note to clients.
The Governor of the Bank of England, Andrew Baileysaid this Thursday that the Central Bank was focused on getting inflation “go all the way down” to its 2% target – from almost 9% in May – and that it was too early to talk about when rates might start to be lowered.
“Lowering inflation is the most important thing we have to do”Bailey told the BBC.
Source: Ambito
