The UK gilt yield has dropped to its lowest level of 2025, after inflation data for September was slightly better than expected.
On Wednesday, official figures showed the UK’s inflation rate had stayed at 3.8% for September, the third month in a row that it had remained unchanged.
The Bank of England has expected the interest rate to rise to 4%.
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It seems the surprising data has had a positive impact on the UK’s gilt yield. Gilts are bonds issued by the UK government, and the yield is the interest rate charged on the bond.
Following Wednesday’s inflation figures, the UK’s gilt yield has dropped to its lowest level of 2025, down to 4.4%.
In a post on X, BBC News’ Economics editor Faisal Islam said the gild yield had ‘tumbled.’
Earlier in the day, Islam had explained that whilst the inflation figures were still “well above target,” if the “downside surprise” carries on it might “help calm the view of UK as an inflation outlier.”
Chancellor Rachel Reeves will be hoping this can continue ahead of her much-anticipated autumn budget in November.
Reacting to the inflation figures for September, she said: “I am not satisfied with these numbers. For too long, our economy has felt stuck, with people feeling like they are putting in more and getting less out.”
The Bank of England’s target for inflation is 2%.