Brent crude, the international oil benchmark, fell 3 percent to $93.94 a barrel, extending its decline for the week to more than 12 percent. The BoE on Thursday became the latest central bank to announce a major rate hike, raising rates by 0.5 percentage points for the first time in 27 years. Despite the rise in interest rates, British government gold yields fell immediately after the announcement as investors bet that the worst squeeze on living standards for more than 60 years would force the central bank to limit further rate hikes. Returns fall when prices rise. The yield on benchmark 10-year gold fell as much as 0.1 percentage point before retracing much of the move to trade at 1.89 percent, down 0.02 percentage points for the day, according to Bloomberg data. “The price action we’re seeing right now in response to the biggest rally in 27 years is not what you would normally expect,” said Karim Chedid, head of investment strategy for Europe at BlackRock’s iShares unit. “It’s a crazy reaction,” continued Cedid, because “the market thinks the BoE can’t continue at the same level [monetary] tightening in this economic context”. U.S. and eurozone government bonds also rose on Thursday, with the BoE warning that other central banks may be forced to ease their stance on inflation to balance economic growth. Like gold, the yield on the US 10-year note fell in early trade before easing to 2.67%, down 0.02 percentage points for the day. Germany’s 10-year bond yield fell 0.07 percentage points to 0.80%. Federal Reserve officials moved this week to play down market speculation that the U.S. central bank will begin cutting interest rates early next year in response to an economic slowdown. St. Louis Fed President James Bullard told CNBC on Wednesday that U.S. interest rates will “probably have to be higher for a longer period of time” to bring inflation down from 40-year highs. “Investors are assuming that central banks won’t go as far as they said they would,” said Eric Knutzen, head of multi-asset investments at Neuberger Berman. “We think that’s very optimistic.” Equity markets wobbled amid an uncertain outlook and weak summer trading. The S&P 500 was up less than 0.1% in afternoon trade, while the Nasdaq Composite was 0.5% higher. The Nasdaq has gained 15 percent since June 30, boosted by strong gains in the technology sector as well as expectations of lower interest rates boosting the valuations of higher-growth companies. The recovery followed the worst first half of the year for US stocks in half a century. “This is a bear market rally,” said Willem Sels, global chief investment officer at private bank HSBC, with markets “embedding the view that inflation will come down quickly and there will be a big turn from central banks.” Sterling also slipped sharply before recovering much of its losses. By mid-afternoon in New York, the currency was 0.6 percent lower against the euro at 1.1865 euros, but up 0.2 percent against the dollar at $1.217.