Bank Of England Might Hike Interest Rates,Gilts Yield High
Gilts – bond issued by uk government touched the nearest high since may 2010 due to speculation over interest rate increase by Bank of England.This varies according to the relationship between current interest rate and sets the price of the stock. But the time for repayment will affect the market price closer to the nominal value as redemption approaches.The yield on a two-year Treasury was up almost 6 basis points at 1.37 per cent, having earlier struck a 12-month high of 1.39 per cent.Official figures yesterday revealed the cost of goods leaving factories(prices that manufacturers have to pay for raw materials) rose 4.2% last month.
Bank of England targets to keep inflation under their control,raising interest rate is one of the method through which banks control inflation.Consumer price inflation remained above three percent of the government target for the tenth consecutive month in December. Consumer prices were expected to rise from 3.4 percent the year before.