As it happened: FTSE 100 soars after Bank of England holds interest rates
Welcome back to City AM‘s FTSE 100 liveblog.
Investors responded positively to the Bank of England’s widely tipped decision to leave interest rates unchanged at 3.75 per cent on Thursday.
Bank of England Governor Andrew Bailey said that volatile energy prices caused by the Iran war will push inflation up further than its current 3.1 per cent rate, though he said that there is yet “little evidence of significant knock-on effects” on prices and wages.
He said: “So far, higher global energy costs have had a limited effect on price and wage setting in the UK. But the longer this volatility persists, the bigger the impact it will have on inflation, and the more likely it is we will need to raise Bank Rate to ensure that inflation falls back to our two per cent target.”
Though the Monetary Policy Committee (MPC) was again split 6-3 in its decision to hold rates, Bailey was not alone among its hawkish members in warning that an interest rate hike is on the horizon. Economists have said rates could rise four times by July next year.
Chris Cheverall, the UK head of CMC Markets, said: “The cost of higher-for-longer rates is already being felt by consumers, with tighter borrowing conditions increasing pressure across household and corporate finances.
“The FTSE 100 has proved relatively resilient against that backdrop, helped by its international earnings and exposure to sectors including energy, mining, healthcare and banking.”
The Bank’s rates hold came after the US’ Federal Reserve defied pressure from President Donald Trump by hiking bank rates by 25 basis points.
Power company SSE and tech group Computacenter were among the FTSE 100’s biggest risers on Thursday, as consumer stocks like Marks and Spencer and JD Sports saw their shares slide.
We will be bringing you all the latest market updates and analysis.
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