Instant view: Bank of England delivers first rate hike in three years, gilt yields rise - Reuters

The Bank of England has raised interest rates for the first time in three years, a decision that lifted gilt yields and marks a turning point in UK monetary policy after an extended period of ultra-low borrowing costs. The move signals the central bank's intent to address inflationary pressure, though the pace and scale of further tightening remain open questions for markets.

For investors, the development matters on several fronts. Higher gilt yields raise the return on government debt but also increase borrowing costs across mortgages, corporate credit and other lending. Rate-sensitive sectors and long-duration assets tend to feel the shift most directly, while financial institutions may see lending margins adjust. Currency markets also respond, as rate differentials influence sterling's relative appeal.

What to watch: the BoE's forward guidance and the tone of future policy statements, which will shape expectations for the pace of tightening; the trajectory of inflation data; and how gilt curves respond as markets price in the path ahead. The durability of this policy shift, rather than the single hike itself, is likely to be the more consequential variable for portfolios.