Gilt Yields Dip as Reeves Sticks to Fiscal Rules Ahead of BOE Decision
The pound and gilt yields decreased following Finance Minister Rachel Reeves' commitment to fiscal rules amidst Bank of England's looming rate decision. Despite high interest rates and under-investment, Reeves remains dedicated to her budget goals, fueling speculation over future taxes and potential cuts by the BOE.
The financial landscape saw shifts on Tuesday as the pound and gilt yields declined after Finance Minister Rachel Reeves affirmed her dedication to fiscal rules in her upcoming budget.
High interest rates and under-investment continue to pressure public spending, forcing Reeves to maintain strict adherence to her budgetary goals. Following her speech, sterling dropped 0.34% to $1.3092, marking its weakest monthly performance against the dollar since July.
Markets are now speculating potential tax increases and further austerity measures, with a near-even chance of the Bank of England adjusting rates on Thursday due to cooling inflationary threats.
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