London Close: FTSE 100 Retreats from Record High as BoE Holds Rates Steady
UK stocks ended lower on Thursday as investors took profits after a recent rally, influenced by the Bank of England's interest-rate decision and concerns over economic growth. Losses in Frankfurt and Paris, combined with a weak start on Wall Street, dampened market sentiment in afternoon trading.
The FTSE 100 dropped 0.4% to 9,735.78, retreating from Wednesday's record close of 9,777.08. Gains in banks, miners, and retailers were offset by significant declines in blue-chip stocks such as Hikma, Smith & Nephew, Diageo, and Convatec.
BoE Interest Rate Decision
The Monetary Policy Committee's meeting was the session's highlight, with the Bank of England voting 5-4 to keep the borrowing cost steady at 4%. This decision broke its usual pattern of cutting rates every other meeting.
Despite sluggish economic growth, the BoE faces stubborn inflation, with the consumer price index at 3.8%. This remains well above the Bank's long-term target of 2%.
“Today’s decision clearly opens the door to a December cut, but that remains contingent on the incoming data," said Matt Swannell, chief economic advisor to the EY ITEM Club.
“If there are further signs of falling inflationary pressures in the coming months and if the bulk of the tax rises expected at the Autumn Budget are introduced almost immediately, then there might be a slim majority on the Committee in favour of a Christmas cut."
Summary: The FTSE 100 pulled back slightly after a record high amid the Bank of England's decision to hold interest rates, reflecting concerns over inflation and economic growth.