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Investors reduce bets on BoE rate hike after coronavirus variant news

Investors cut bets on BoE rate hike after coronavirus variant news
Investors cut bets on BoE rate hike after coronavirus variant news Copyright Thomson Reuters 2021
Copyright Thomson Reuters 2021
By Reuters
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LONDON - Investors scaled back their bets on Friday on the chance of a Bank of England interest rate hike in December after a coronavirus variant that might be harder to combat with vaccines was detected in South Africa.

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

The BoE's new chief economist, Huw Pill, said he thought the way was clear for a first rise in rates since the start of the coronavirus pandemic. But he declined to send any signal 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 tumbled by 15 basis points, their biggest one-day fall since the onset of 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%.

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