2026.03.0313:19:52UTC+00UK Gilt Yields Jump as BOE Rate Cut Expectations Slide

The UK 10-year gilt yield jumped to 4.49%, up 20 basis points on the day, as markets scaled back expectations of a Bank of England rate cut in March amid persistent inflation concerns. The two-year gilt yield climbed above 3.8%, its highest level since December 29, and is on track for its largest one-day rise since April 2025. Rising oil and gas prices, driven by the conflict in the Middle East, have intensified global inflation risks and led investors to reassess the likelihood of rate cuts across major central banks. Markets now assign just a 22% probability to a BOE cut in March, down sharply from 83% last week. Investors also digested downgraded growth projections from Chancellor Rachel Reeves. The Office for Budget Responsibility (OBR) reduced its 2026 UK growth forecast to 1.1%, from 1.4% in November, before factoring in potential energy shocks. However, it raised its growth forecasts for 2027 and 2028 to 1.6% for both years, and also projected lower government borrowing and subdued inflation.