FTSE 100 Slips Amidst BoE Rate Cut and Budget Projections

The Bank of England cut interest rates from 5% to 4.75%, impacting the FTSE 100 index. The expected rate cut follows a new government budget projected to increase inflation and economic growth. The pound rose, affecting exports while market focus shifts to the Federal Reserve's policy decision.

The FTSE 100 index dipped on Thursday after the Bank of England (BoE) moved to lower interest rates, which was anticipated, amidst forecasts of increased inflation and economic growth following the introduction of the new government's budget.

The Monetary Policy Committee opted to reduce rates to 4.75% from 5%, meeting investors' expectations. The central bank noted that the recent budget from finance minister Rachel Reeves, entailing higher tax, spending, and borrowing, could elevate the inflation rate by nearly half a percentage point.

Market attention now shifts to the Federal Reserve's upcoming decision, with expectations of a 25 basis point rate cut. Despite some market fluctuations post-U.S. presidential election results, the FTSE 250 index found support, while individual companies including BT and Rolls-Royce experienced declines.