UK 10-year gilt yields were down 2bps on the day at 5.01% as of Thursday morning, close to the two-week low of 4.979% reached on Wednesday before yields recovered later in the session.
Most economists in a Reuters poll have long anticipated the BoE holding rates at 3.75% through the year, while financial markets have generally priced in an increase. Governor Andrew Bailey attributed the divergence to markets factoring in the risk of an escalation in the US-Iran conflict.
The BoE’s current rate of 3.75% has been held at every meeting in 2026. The Monetary Policy Committee held the base rate for a fifth consecutive meeting on 30 July, with the vote split widening to 6–3, up from 7–2 in June.
Inflation data published last week showed UK consumer prices rose to 2.9% in July, driven by higher household energy costs. The labour market, which MPC members have identified as the primary source of longer-term inflation concern, remained subdued.
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