Borrowing costs

Government borrowing costs hit their highest level in nearly three years

Government borrowing costs hit their highest in nearly three years, with investors betting interest rates will rise again in less than four weeks










Government borrowing costs hit their highest level in nearly three years, with investors betting interest rates will rise again in less than four weeks.

The yield on UK two-year bonds – a key measure of what the government pays to borrow – hit 0.831% while the yield on five-year gilts hit 0.988%. This is the highest level since March 2019.

Expectation: Investors are betting interest rates will rise again in less than four weeks

The benchmark ten-year gilts yield hit 1.17%, the highest since October.

The rise in bond yields was driven by expectations that soaring inflation will cause interest rates to rise in Britain and the United States.

The Bank of England raised rates from 0.1% to 0.25% in December, the first increase in three years.

Financial markets are forecasting a 70 percent chance that the Bank will raise rates again to 0.5 percent on Feb. 3 after the next Monetary Policy Committee meeting.

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