london jan 4 reuters  yields on shortdated british government bonds started 2022 by hitting their highest level since mid2019 as investors bet on more interest rate rises by the bank of england against a backdrop of rising inflation fiveyear gilt yields rose more than 8 basis points on the day to peak at 0907 at 0920 gmt on their first trading day of the year reaching a level last seen in may 2019 twoyear yields rose a similar amount to peak at 0766 also their highest since may 2019 bar a few seconds at the start of trading on oct 29 us government borrowing costs surged on monday reflecting expectations of tighter federal reserve policy despite higher covid19 cases tenyear bond yields in the euro area were near twomonth highs on tuesday read more the boe surprised investors by raising rates last month for the first time since the start of the covid19 pandemic just as infections from the omicron variant began to surge six weeks earlier it had held off a widely expected rate rise due to a lack of official data on the impact of the end of a job furlough programme the boe now forecasts consumer price inflation will hit a 30year high of around 6 in april investors are pricing in a greater than 80 chance that the boe will raise its main rate to 05 after its next meeting on feb 3 and see rates at 1 by september a rate rise next month would also prompt the boe to stop reinvesting proceeds from maturing bonds in its 875 billion pounds 118 trillion of gilt purchases allowing the stockpile to fall for the first time since it began quantitative easing in 2009 britain recorded record numbers of new covid19 infections over the christmas period which has caused fewer people to go out shopping and badly hurt the hospitality industry as well as driving high levels of staff absence but prime minister boris johnson on monday said he did not think new legal restrictions would be needed in england despite considerable pressure on hospitals as omicron appeared to be milder than previous variants read more