The Bank of England's voting results unleashed hawkish tendencies, and inflation forecasts were raised sharply, driving short-term British bond yields higher. Eight members of the committee supported raising the benchmark interest rate by 25 basis points, while Katherine Mann advocated a 50 basis point increase. The majority of the market previously expected the vote to be 7 to 2, and members opposed to interest rate hikes advocated keeping interest rates unchanged. The central bank said in September that “there is currently almost no evidence of significant second-round inflation effects on prices and wage pricing,” but now it is expected that CPI inflation will rise to “about 5%” by the middle of next year. The statement was very hawkish, but the follow-up speech by Central Bank Governor Andrew Bailey was the final guide to the market for the day. The yield on 2-year British bonds, which are most sensitive to policy interest rates, rose 3 basis points to 4.77%. The yield had declined by about 2 basis points before the resolution was issued.

The Bank of England's voting results unleashed hawkish tendencies, and inflation forecasts were raised sharply, driving short-term British bond yields higher. Eight members of the committee supported raising the benchmark interest rate by 25 basis points, while Katherine Mann advocated a 50 basis point increase. The majority of the market previously expected the vote to be 7 to 2, and members opposed to interest rate hikes advocated keeping interest rates unchanged. The central bank said in September that “there is currently almost no evidence of significant second-round inflation effects on prices and wage pricing,” but now it is expected that CPI inflation will rise to “about 5%” by the middle of next year. The statement was very hawkish, but the follow-up speech by Central Bank Governor Andrew Bailey was the final guide to the market for the day. The yield on 2-year British bonds, which are most sensitive to policy interest rates, rose 3 basis points to 4.77%. The yield had declined by about 2 basis points before the resolution was issued.