LONDON: British government bond prices recovered on Wednesday, tracking German Bunds higher and reacting little to new forecasts from the Bank of England that backed market expectations for when it will start to raise interest rates.
The BoE cut its forecasts for British economic growth over the next three years, knocking sterling from almost seven-year highs against the dollar and extending already hefty gains in gilt prices.
Gilt prices rose after the BoE's quarterly inflation report, then retreated to about their level before its release.
The 10-year gilt yield was last down around a basis point on the day at 1.975 percent, up from a day's low of 1.916 percent at 1232 GMT.
"(The BoE report) was relatively neutral in terms of all the typical policy signalling with the CPI projections and so forth, and you can see that in the market reaction," said Simon Peck, strategist at RBS.
Peck said market expectations of the path of British interest rates had not changed much after the inflation report. The report indicated a rate increase around May next year.
Thirty-yield gilt prices gained the most, reversing around half their losses on Tuesday.
The premium 10-year gilts offer over the equivalent German Bund was last up around a basis point at 133 basis points.
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