Gilt yields fall 19 basis points ahead of Bank of England interest rate decision

15-year gilt yields chart - Based on figures for July 2024

Annuity Rates UK - July 2024 review

Providers of annuities keep rates steady before the Bank of England Monetary Policy Committee (MPC) meeting to decide if interest rates are to remain the same or reduce.

In contrast 15-year gilt yields decrease -19 basis points as UK Consumer Price Index (CPI) inflation remains at 2% for June increasing the chance of an interest rate cut on 1 August 2024.

In the US the Federal Reserve preferred measure Personal consumption Expenditure (PCE) inflation reduced to 2.5% increasing the likelihood of a cut in interest rates in mid September.

Find related news here:
Gilt yields reduce as UK inflation falls to Bank of England 2pc target
Annuity rates edge up with high gilt yields as UK inflation misses target

Providers of standard annuities increased annuity rates by an average of +0.07% this month and we would expect rates to decrease by -1.97% in the short term if yields remain at current levels.

For smoker and enhanced annuity providers decreased their rates by an average of -0.11% and we would expect rates to decrease by -1.70% in the short term if yields do not fall.

Fig 1 below shows the annuity rates changes for the whole market and the proportion that have either increased, decreased or or did not change. It also shows the range of the changes of the annuity rates over the last month:

Annuity Rates Changes Increase No change Decrease   10%   54%   36% Increases of: max 2.8%   Decreases of: max 0.7 %

Fig 1: Annuity rate changes for the whole market

Fig 2: Change in standard rates last month compared to gilt yields

Fig 3: Change in enhanced rates last month compared to gilt yields