UK long-term borrowing costs hit 28-year high
Summary
The cost for the UK government to borrow money for a long time rose to the highest level since 1998. This increase happened as investors sold bonds worldwide, worried about rising oil prices pushing up inflation, which could lead to higher interest rates.Key Facts
- The interest rate on 30-year UK government bonds (gilts) reached 5.89%, the highest since early 1998.
- The 10-year gilt yield rose to 5.25%, the highest since the 2008 global financial crisis.
- Higher borrowing costs make it more expensive for the UK government to handle its debt.
- Rising oil prices and international tensions, including conflict in Iran, are increasing inflation concerns.
- Bank of Japan may raise interest rates to control inflation, pushing Japanese 10-year bond yields to their highest since the 1990s.
- US Treasury Secretary Scott Bessent suggested Japan might act to strengthen the yen after previous currency market interventions.
- US Federal Reserve chair warned inflation is not yet under control, indicating possible future rate increases.
- Concerns also exist about the US deficit, which has grown due to tax cuts and lost tariff revenue; spending cuts might be considered but none announced yet.
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