The rally sweeping across global bond markets received a boost on Wednesday amid mounting signs price pressures are easing in some of the world’s biggest economies.

UK bonds led the advance, with the two-year yield set for its biggest slide since March after data showed the nation’s inflation cooled more than expected. The moves are part of a global repricing that kicked off last week when US inflation unexpectedly posted its smallest advance in more than two years.

From the Federal Reserve to the European Central Bank, investors are now reassessing how far rates will need to rise. Even policymakers are tempering expectations, with ECB member Klaas Knot, traditionally one of the most hawkish of the Governing Council, saying on Tuesday monetary tightening beyond next week’s meeting is anything but guaranteed.

The UK data “comes on the heels of both mounting evidence inflation may be beating a more hasty retreat than expected as per the softer US inflation data, and a discernible shift in tone on the part of known hawks within the ECB,” Rabobank analysts led by Richard McGuire wrote in a note.

The inflation report in the UK carries all the more weight because the nation has been an outlier for months. Inflation has surprised on the upside in all of the past four releases, forcing traders to price a Bank of England rate above 6.5%, which would be the highest since 1998.

“The UK will probably still have higher rates of inflation than elsewhere for a while yet, but at least the UK is now following the global trend,” said Paul Dales, chief UK economist at Capital Economics. “Rates are more likely to peak between 5% and 6% than between 6% and 7%.”

Britain’s inflation rate cooled more than expected last month to the lowest level in more than a year. The core gauge fell to 6.9% from 7.1%, while services inflation — a measure being closely watched by the BOE for signs of domestically generated price pressures — also eased.

In response, traders revised down bets on further BOE hikes, pricing the key rate peaking below 6% by February. They also cut wagers on another half-point hike at the next decision in August, with market-implied odds suggesting only a 50% probability now.

The two-year UK yield fell more than 20 basis points to 4.86%. The yield is down around 50 basis points since the US inflation report was released, the biggest drop among developed-nation bonds.

The repricing in Fed expectations has been less pronounced as prices in the US have been cooling for some months. Money markets have pared wagers on the terminal Fed interest rate by 5 basis points and now price just 32 basis points of further policy tightening, which suggests this month’s hike may very well be its last.

Still, the shift in mood has spurred big gains for fixed-income markets. The yield on the 10-year Treasury note has dropped more than 20 basis points since the US inflation report, while the one on similar-dated German notes fell 30 basis points.

“One swallow does not make a summer, but the US has been a few months ahead of Europe in the current inflation cycle and so hopefully, this presages further benign inflation news,” said Guy Foster, chief strategist at RBC Brewin Dolphin, in response to the UK data.

--With assistance from Naomi Tajitsu.

(Updates with context, comments and market moves throughout.)