Bank of England won’t push back against higher gilt yields

The Bank of England won’t be worried by the recent jump in gilt yields given that it has been triggered by the growing possibility of a COVID-19 vaccine improving the economic outlook. As such, we have revised up our gilt yield forecasts. However, as the Bank is unlikely to reverse its Quantitative Easing (QE) or raise interest rates for many years, we think gilt yields will still stay very low for a long time yet.