Investors Find Support for U.K. Bonds in BOE Attention to Wages
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Investors digging through minutes of the last Bank of England policy meeting discovered a new reason to hold onto their gilts: a stronger focus on wages.
The notes showed a policy board more open to using pay as a predictor of future inflation. And since salary growth has been almost stagnant, investors took this as a signal that the next interest rate increase may come later than expected. The pound fell for a sixth day against the dollar, erasing an intraday advance, and U.K. government bonds rose as the minutes also showed the Monetary Policy Committee voted unanimously to hold borrowing costs at a record-low at the July 9-10 meeting.