UK Inflation Higher Than Expected, Market Reduces Probability of Bank of England Rate Cut

BlockBeats News, November 20th, after UK inflation data came in higher than expected, UK government bond yields rose as market expectations of a reduced number of interest rate cuts increased. The UK's overall inflation rate in October rose from 1.7% in September to 2.3%, exceeding the 2.2% consensus expectation among economists surveyed by The Wall Street Journal.

Richard Flax, Chief Investment Officer at Moneyfarm, stated in a report: "As policymakers remain cautious, this inflation increase has reduced the likelihood of a rate cut in December."

According to data from the London Stock Exchange Group, the market is pricing in a 16% probability of a rate cut by the Bank of England in December. Data from the Tradeweb trading platform shows that the yield on the 10-year UK government bond rose by 5 basis points to 4.485%, while the yield on the 2-year UK government bond climbed 4 basis points to 4.451% (FXStreet).