Sterling dips, gilt yields fall after BoE rate hike

LONDON (Reuters) - The British pound fell and gilt yields declined after the Bank of England raised its key interest rate to 3.5% on Thursday in its ninth interest rate increase in a row.

The BoE raised its Bank Rate by 50 basis points (bps) in a split vote as it attempts to bring sky-high inflation back down towards its 2% target. Data released this week showed consumer price inflation eased slightly from a 41-year high in November.

The pound was last down 0.9% at $1.2305, having been down around 0.7% before the announcement. Sterling hit its highest level in six months at $1.2446 on Wednesday.

Against the euro, the pound was down around 0.3% at 86.18 pence.

Gilt yields fell across the curve with Britain's 10-year yield hitting a session low of 3.212% after the announcement.

London's blue-chip FTSE 100 index briefly trimmed losses and was last down 0.5%, while the FTSE 250, a more domestic-focused index of mid-cap stocks, was down 0.4%.

An index of British banks barely budged and was last down 1.4%.

(Reporting by Samuel Indyk, editing by Dhara Ranasinghe)