Investors back off bets on BoE rate hike

Investors back off bets on BoE rate hike

LONDON, Nov 26 - Investors have backed off their bets on Friday on the possibility of a Bank of England interest rate hike in December due to a coronavirus variant that might be harder to combat with vaccines detected in South Africa.

Interest rate futures were pricing a roughly 55% chance of a 15 basis-point rate hike by the BoE on December 16 - after its next scheduled monetary policy meeting - compared to a roughly 75% chance on Thursday.

The BoE's new chief economist, Huw Pill, said the way was clear for a first rise in rates since the outbreak of the coronaviruses. He wouldn't give any indication about the likelihood of a move as soon as next month, and he said there were still risks to public health.

Yields on 10 year British government bonds fell by 15 basis points, their biggest one day fall since the financial crisis in March 2020, mirroring moves in U.S. Treasuries and other government bonds.

Yields on two, five, 20 and 30 year gilts fell by between 12 and 13 basis points.

The yield on Britain's 10 year inflation-linked gilt fell to a record low of 3.347%.