Economic news

FTSE 100 Hits Highs on BoE's Biggest Rate Hike in 27 Years

  • BoE hikes bank rate by 50 bps, biggest hike since 1995
  • Unilever down as Ben & Jerry's says it froze directors' salaries
  • Medtech company ConvaTec leads gains among midcaps
  • FTSE 100 up 0.3%, FTSE 250 adds 0.6%

Aug 4 (Reuters) - The FTSE 100 stock index hit session highs on Thursday, while the pound weakened after the Bank of England raised interest rates by the most in 27 years in its effort to combat red-hot inflation.

The British central bank's Monetary Policy Committee voted 8-1 for a half percentage point rise in Bank Rate to 1.75% - the highest level since late 2008.

"The Bank of England has clearly decided that now is the right time to bring out more firepower and raise rates by 0.5% for the first time since 1995," said Paul Craig, portfolio manager at Quilter Investors.

"It has clearly taken note of what the Federal Reserve is doing in the U.S. and feels it could be running out of time to grapple inflation and get it under control."

The BoE's move weakened the pound and helped lift the blue-chip FTSE 100 index, which rose 0.3% after trading in a narrow range for most part of the morning, while the domestically focussed midcap index was up 0.6%.

Even as recession fears mount across the world, UK stocks have fared better than their global peers so far this year.

Shares of Unilever Plc fell 0.5% after Ben & Jerry's independent board said the company had frozen its directors' salaries last month as a pressure tactic.

Rolls-Royce dragged down the aerospace and defence sector, shedding 8.0% even as the aero-engineer said it would see its squeezed operating profit margin improve in the second half. 

Gold miner Centamin Plc rose 5.3% after it reported a 4% rise in its first-half revenue supported by higher bullion prices.

Medical technology company ConvaTec jumped 11.1%, leading gains among midcaps after reporting higher first-half revenue.

Reporting by Shreyashi Sanyal in Bengaluru; Editing by Sherry Jacob-Phillips, Rashmi Aich and Shinjini Ganguli

Source: Reuters

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