(Bloomberg) -- US Treasury yields continued their advance higher Friday as markets reacted to hawkish comments from central banks and Brent crude oil stayed above $100 a barrel.

Two-year yields climbed four basis points to 3.83%, while the 5-year yield gained three points to 3.91%, as market participants dialed back expectations for US Federal Reserve interest rate cuts this year because of the spike in oil prices. Prior to the start of the Iran war, swaps traders were pricing in 61 basis points of easing by the central bank; now they expect just three.

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“The inflation backdrop is growing increasingly problematic for the Fed and rate cuts are not likely anytime soon,” James Reilly, senior markets economist at Capital Economics, wrote in a note.    

The Federal Reserve, European Central Bank and the Bank of England all held rates this week as they grapple with an uncertain outlook because of the conflict in the Middle East. But officials are signaling to markets that they are ready to act soon if necessary to contain inflationary pressures.

The European Central Bank will need to consider hiking interest rates as soon as next month if price pressures build further due to the Iran war, Governing Council member Joachim Nagel said on Friday. Bank of England Governor Andrew Bailey warned Thursday that policy “must respond” to the risk of a more persistent impact of the energy shock on prices.

--With assistance from Ruth Carson.

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