Analysis by Paul Kelsobusiness and economics correspondent

UK markets steadied on Friday, providing some reassurance to Rachel Reeves as investors, policymakers and businesses continued to absorb the scale and implications of her first budget.

There was an unusually large rise in the cost of UK government borrowing on Thursday in response to the massive package of tax hikes and increased borrowing.

Yields on Britain’s benchmark 10-year gilts – effectively the interest rate the government pays to borrow money – rose to their highest level this year, up 0.1% to 4.52%.

This wasn’t a ‘Liz Truss’ moment – Kwasi Kwarteng’s mini-Budget sparked the biggest one-day rise in more than two decades and pushed the pound down 8%.

But the move was big enough to trigger an echo of that crisis that Ms Reeves’ opponents, some of whom were in Liz Truss’s government at the time, were quick to speak out.

Interpreting money markets is a complex and inexact science — those who master it tend to make more money than journalists — but the surge seemed to be a response to two factors.

First, a small premium for increased demand for UK debt implied by higher-than-market-expected spending and borrowing plans.

Second, the possibility that this vast budget will be inflationary and therefore slow down the Bank of England’s plans to cut interest rates. Bond prices inform and are informed by base rates, and if markets believe the Bank will leave them higher for longer, this is reflected.

Officially, the government does not comment on market movements, but an unexpected interview by Reeves with Bloomberg Financial on Thursday afternoon and the appearance of his number two, Darren Jones, in the morning round on Friday spoke of a desire to calm any jitters.

Maybe it worked. After an initial upward spasm on Friday morning, gilt yields eased, falling below their opening price Thursday morning by midday before rising in the afternoon, according to the US Treasury.

They finished the week higher than before the budget, which could be interpreted as a small “risk premium” for the UK.

Meanwhile, the pound has recovered the lost cent against the dollar since Reeves took his seat in the Commons on Wednesday afternoon.

What happens next will be determined in part by the Bank of England’s Monetary Policy Committee, which meets on Thursday. In addition to a decision on interest rates, it will produce new forecasts for growth and inflation, which could further influence investor sentiment.

Rates are highly likely to be cut by at least 0.25 percentage points to 4.75%, with a 90% chance of a similar Christmas cut at the next meeting in late December.

That would be welcome news for consumers, never mind Reeves.