London Close: FTSE 100 Pulls Back After Record High Amid BoE Decision
UK stocks ended lower on Thursday as investors took profits following a recent rally, influenced by the Bank of England’s interest rate decision and lingering concerns over economic growth.
Markets in Frankfurt and Paris saw sharp declines, while a weak opening on Wall Street further weighed on sentiment during afternoon trading.
FTSE 100 Performance
The FTSE 100 dropped 0.4% to 9,735.78, retreating from Wednesday’s record high of 9,777.08. Gains from banks, miners, and retailers were offset by significant losses in blue-chip stocks such as Hikma, Smith & Nephew, Diageo, and Convatec.
Bank of England Interest Rate Decision
The focus of the session was the Monetary Policy Committee meeting, where the Bank of England voted 5-4 to keep borrowing costs unchanged at 4%. This decision departed from the usual pattern of cutting rates every other meeting.
Despite sluggish economic growth, inflation remains persistently high, with the consumer price index at 3.8%, well above the Bank's 2% target.
“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 retreated after a record high as the Bank of England paused rate cuts amid persistent inflation and economic uncertainty, keeping future easing dependent on upcoming data.