LONDON (Reuters) - A closely watched gauge of financial markets' medium-term expectations for British inflation rose to its highest in more than a decade, potentially raising concerns at the Bank of England that inflation expectations are rising too quickly.
Five-year five-year forward inflation expectations rose to 3.9054% on Tuesday, up 3 basis points from Monday's close.
The expectations are based on the RPI measure of inflation used for British government bonds, not the lower CPI measure targeted by the BoE.
BoE monthly historic data shows that the gauge previously had an end-of-month peak of 3.8689% in June 2008 and last averaged above its current level in February 2000.
(Reporting by David Milliken; Editing by William Schomberg)