2026.03.0508:34:44UTC+00UK Gilt Yields Climb Amid Inflation Concerns

The yield on the UK 10-year gilt rose back to around 4.4%, its highest level since 12 February, as investor focus shifted again to inflation risks amid the escalating conflict in the Middle East, now in its sixth day. The resulting jump in oil and gas prices has intensified global inflation concerns, leading investors to rein in expectations for Bank of England interest-rate cuts. Markets now see only about a 20% chance of a rate cut this month and are pricing in just a single 25-basis-point reduction in borrowing costs over the whole year.

At the same time, the Office for Budget Responsibility lowered its 2026 UK growth forecast to 1.1%, from 1.4% in November, even before accounting for any potential energy-price shock. However, it revised up its projections for 2027 and 2028 to 1.6% in both years, alongside expectations for reduced government borrowing and more moderate inflation.