Investors were almost fully pricing in five quarter-point interest rate cuts by the Bank of England during 2024, a day after the U.S. Federal Reserve signalled it was moving towards cutting borrowing costs.

The BoE, which is expected to announce it has kept borrowing costs on hold for a third meeting in a row at 1200 GMT on Thursday, has stressed it is not close to thinking about cuts.

But signs that other central banks are moving in that direction and data showing the British economy is flat-lining have added to bets in financial markets on the BoE lowering Bank Rate from its 15-year high of 5.25%.

Rate futures markets on Thursday showed a first 25 basis-point rate cut as soon as March was seen as a 60% possibility by investors, with two quarter-point cuts fully priced in by June and five such moves almost fully priced in by the end of 2024.

Investors bought British government bonds heavily as the market opened, pushing yields on gilts down to their lowest levels since May as they bet increasingly on the prospect of the BoE cutting interest rates.

Two-year gilts, which are most sensitive to short-term changes in borrowing costs, were down by 17 basis point at 4.198% at 0810 GMT, tracking similar moves for German and U.S. government bonds of the same duration.

(Writing by William Schomberg; editing by Sarah Young)