London stocks drop 1% ahead of big BoE rate hike

UK's central bank looks set to raise rates by at least half a percentage point in a bid to tame inflation, which is just off a 40-year high.


Reuters | London | Updated: 22-09-2022 12:58 IST | Created: 22-09-2022 12:56 IST
London stocks drop 1% ahead of big BoE rate hike
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UK shares on Thursday tracked weakness in European and Asian peers after the U.S. Federal Reserve delivered another 75-basis-point interest rate hike, with investors bracing for a second outsized hike by the Bank of England later in the day.

The blue-chip FTSE 100 index slid 1.0% by 0706 GMT, while the domestically focussed mid-cap index declined 1.1%. UK's central bank looks set to raise rates by at least half a percentage point in a bid to tame inflation, which is just off a 40-year high. The BoE had delayed its announcement by a week due to the national mourning following Queen Elizabeth's death.

Economists polled by Reuters expect the BoE to raise rates to 2.25% from 1.75%, while financial markets see a 92.4% chance of a bigger move to 2.5%. Rate-sensitive banks and insurance shares fell 1.4% and 1.7%, respectively, leading losses on the benchmark FTSE 100 index.

UK's biggest sportswear retailer JD Sports fell 6.3% after it reported lower profit for the first half and said it would remain cautious about trading through the rest of the year as sky-high inflation crimps consumer spending. Meanwhile, the sterling hit a new 37-year low against a firm dollar.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

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