Investors cheer BoE move to pause gilt sales, driving bond rally

British government bonds rallied sharply on Thursday after the Bank of England said it would pause active gilt sales, easing pressure in a market hit by rising yields. The BoE kept interest rates unchanged at 3.75% in a 6-3 vote, but warned inflation would likely top 4% next year. Governor Andrew Bailey also cautioned that prolonged conflict in the Middle East could require higher borrowing costs. The focus was the BoE’s plan to offload nearly £500 billion ($670 billion) in bond holdings, including a halt to sales until April and an end to selling long-dated gilts. Longer-dated yields led the drop.