U.K. government bonds saw heavy buying, pulling yields lower, Thursday after the Bank of England raised rates for the first time in a decade. The U.K. 10-year government bond yield fell 5.8 basis points to 1.287%. Seven out of nine members of the BOE’s policy-making panel voted for hiking its benchmark interest rate to 0.5% from 0.25%. Despite a move that would ostensibly tighten monetary policy, which tends to be bearish for bonds, U.K. government paper attracted money after the policy statement said future rate hikes would arrive “at a gradual pace and to a limited extent.” Britain’s expected departure from the European Union’s membership, or Brexit, has weighed on economic growth while propelling inflation higher.
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