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Gilt Yields Rise as Hopes for Bank of England Rate Cut Fade

UK inflation fell to a ten‑month low in January, reviving hopes of a Bank of England rate cut in March. However, gilt yields surged, with five‑year yields up 19 basis points, ten‑year up 14 basis points and two‑year up 12 basis points, erasing recent borrowing‑cost relief. Mortgage specialist Nicholas Mendes warned that the near‑term cut is now less probable as supply‑chain shocks keep inflationary pressure alive. He highlighted that lingering energy‑supply disruptions could add 0.3‑0.4% to UK inflation, complicating the BoE’s policy path.