UK 10-year gilt yields fell further to around 5.25%, retreating from 19-year highs, after the Bank of England held rates at 3.75% in a 6-3 vote and warned that rates may need to rise if inflationary pressures intensify due to the conflict in the Middle East. The MPC also unanimously voted to reduce its stock of UK government bond purchases to zero through a multi-year programme, with sales and maturities bringing the annual pace to an average of GBP 46 billion through 2034. That is slower than the previous pace and below the GBP 50 billion reduction expected by markets. The BoE expects inflation to reach twice its 2% target early next year, while raising its third-quarter GDP growth forecast to 0.4%. Meanwhile, the Fed raised rates by 25 basis points yesterday, the first hike since July 2023, and signaled another increase later this year. Elsewhere, oil prices fell for a second consecutive session but remained elevated amid continued uncertainty over the Middle East.