FTSE 100 dips in run-up to Fed verdict; UK inflation softens

London's FTSE 100 edged lower on Wednesday as investors remained cautious ahead of the Federal Reserve's policy decision later in the day, while softer domestic inflation data cemented bets of interest rate cuts this year from the Bank of England. The blue chip FTSE 100 slipped 0.2% as of 0931 GMT, with markets eyeing the Fed decision that could potentially set the tone for global central banks.

London's FTSE 100 edged lower on Wednesday as investors remained cautious ahead of the Federal Reserve's policy decision later in the day, while softer domestic inflation data cemented bets of interest rate cuts this year from the Bank of England.

The blue chip FTSE 100 slipped 0.2% as of 0931 GMT, with markets eyeing the Fed decision that could potentially set the tone for global central banks. The mid cap FTSE 250 was flat at 19,436.70 points.

However, in some relief to investors, Britain's inflation stood at 3.4% in February, slightly below economists' expectations of 3.5%, according to a Reuters poll, ahead of the Bank of England's monetary policy update on Thursday. We're still seeing consumer price pressure and cannot expect any move tomorrow (from BoE)," said Aoifinn Devitt, chief investment officer at London LGPS CIV, adding that other major central banks around the world and the Fed have not taken the lead to cut rates so far

Money markets have priced in about 70 basis points of rate cuts for this year, up from around 67 bps prior to the data release. The yield on the benchmark 10-year gilt fell after the data and was last standing at 4.010%, while rate-sensitive homebuilders index advanced 0.9%, among top sectoral performers.

Burberry fell 4%, tracking a fall in European luxury goods group Kering, which warned about a potential sales drop in the first quarter. The stock dragged the personal goods index to hit an over 11-year low, last down 4.1%.

Among other stocks, Johnson Matthey jumped 8.2%, following the firm's announcement that it will sell its medical device components business to Montagu Private Equity for $700 million. Halma Plc rose 3% to the top of the benchmark index after UBS upgraded the technology firm to "buy" from "neutral".