British rate hike speculation grows

The Bank of England made no new attempt to talk down borrowing costs in financial markets yesterday, prompting investors to pile on bets that it will raise interest rates sooner than it has suggested as growth picks up.

The BoE left monetary policy unchanged at its third monthly meeting under new governor Mark Carney and opted not to repeat its warning of July that investors were getting ahead of themselves by pushing up bond yields.

Yields on 10-year British government bonds broke through the 3% level for the first time in two years after the decision, pushed up also by strong US economic data that reinforced expectations the Federal Reserve could start scaling back its stimulus programme.