BoE Rate Decision Sparks Bond Yield Surge Amid Inflation Concerns

In a significant move, the Bank of England on Thursday reduced interest rates by 25 basis points, aligning with market expectations. However, the decision triggered a notable rise in British government bond yields and a fall in major stock indexes.

Despite the rate cut, inflation fears lingered, with a voting split among policymakers, four of whom favored keeping rates unchanged. This hawkish sentiment drove yields on gilts higher, with the 10-year yield climbing 6 basis points to reach 4.59%.

The financial markets reacted with Britain's FTSE 100 index down by 0.7% while mid-cap stocks remained stable. The yield increase supported a stronger pound, up 0.5% against the dollar at $1.3407, also appreciating against the euro.

(With inputs from agencies.)