A gauge of the market’s expectations for U.K. inflation are easing from the highest in more than two decades, with traders relieved by the start of the Bank of England’s rate-hike cycle.
Ten-year breakeven rates -- derived from the difference between yields on 10-year gilts and the equivalent inflation-linked security -- are set to drop this month by the most since October 2019. The move comes in the wake of the BOE’s shock 15-basis-point rate increase this month, and as yields on inflation-linked bonds rose to levels not seen since early November.
