London’s top indexes jumped yesterday after the Bank of England lifted interest rates for the third meeting in a row.
The capital’s premier FTSE 100 index climbed 1.28 per cent higher to 7,385.34 points, while the domestically-focused FTSE 250 index, which is more aligned with the health of the UK economy, rose 0.34 per cent to 20,975.69 points.
Threadneedle Street hiked rates 25 basis yesterday, sending borrowing costs to pre-pandemic levels of 0.75 per cent.
The hike also marked the third meeting in a row in which the Bank has sent rates higher for the first time since 1997 as it switches policy from supporting the British economy through the Covid-19 crisis to taming runaway inflation.
The cost of living is already running at a 30 year high of 5.5 per cent, but it is expected to trend much higher, driven by soaring energy prices triggered by the Russia-Ukraine war.
Industrial mega caps, which represent a large share of the FTSE 100, were the best performers, largely driven by concerns about a slowdown in the Chinese economy easing after Beijing policymakers indicated they will launch a set of measures to support markets.
Miners Rio Tinto and Fresnillo were among the biggest risers.
Oil giant Shell advanced 3.25 per cent.
Industrial firms are likely to benefit from China supporting its economy as it is an enormous consumer of commodities.
The pound gained ground on the greenback, strengthening 0.11 per cent to buy $1.316.
European shares also fared well. The pan-European Stoxx 600 climbed over 0.3 per cent and France’s Cac 40 added 0.36 per cent.