UK Bank Rate holds at 4.00% after November rise, while gilt yields keep falling

Overnight market rates have risen in line with Bank Rate

Bank Rate is the Bank of England's main policy interest rate. It steers borrowing costs across the UK economy. It was 4.00% on 9 Nov, up from 3.75% before the 5 Nov quarter-point rise.

The sterling overnight index average (SONIA) measures the average interest rate banks pay to borrow sterling overnight. It was 3.985% on 6 Nov, compared with about 3.734% before the rise. SONIA is still about 1.5 basis points (hundredths of a percentage point) below Bank Rate, the same gap as before.

Government bond yields kept falling after the rate rise

Gilts are UK government bonds, and their yields show what it costs the government to borrow. The rate rise was widely expected. Lower oil prices and lower US Treasury yields also pushed gilt yields down.

• The 10-year nominal par yield fell to 5.118% on 6 Nov. It was 5.210% on 3 Nov and 5.374% on 19 Oct. That is about 26 basis points lower over three weeks.
• The 5-year yield was 4.772% on 6 Nov, down from 4.968% on 19 Oct.
• The 20-year yield was 5.429%, down from 5.711%.

Long-term yields fell more than short-term ones. As a result, the gap between the 5-year and 20-year yields narrowed from about 74 basis points to 66 basis points.

The pound held firm

On 9 Nov the pound was worth $1.3403, up from 1.3360 on 6 Nov. It bought €1.1972 and ¥211.94. The sterling effective exchange rate index measures the pound against a basket of trading partners' currencies. It was 86.30 on 9 Nov, a little below its 5 Nov level of 86.60.