- Shell up on dividend boost, buyback
- Pound cuts losses after BoE decision
- Real estate stocks extend losses
- FTSE 100 up 0.3%, FTSE 250 off 0.3%
Feb 1 (Reuters) - The UK's blue-chip index came off session highs on Thursday after the Bank of England (BoE) held interest rates steady as expected and said it would need more evidence that inflation is set to fall to its 2% target before cutting rates.
The blue-chip FTSE 100 was up 0.3%. It was up as much as 0.6% before the BoE's statement.
The pound cut some losses. Rate-sensitive banks climbed 0.3%, while real estate stocks extended losses on the prospect of interest rates staying higher for longer.
The BoE said it would "keep under review for how long Bank Rate should be maintained at its current level". Officials at the U.S. Federal Reserve and European Central Bank have been more explicit that rate cuts are on the agenda.
"It appears there no longer exists a firm commitment to keep rates at levels restrictive to economic activity. However, rate-setters are likely to tread warily and will wait to see confirmation that inflation has resumed its downward pathway before committing to policy easing," said Jeremy Batstone-Carr, European strategist at Raymond James Investment Services.
"While the exact timing of the first rate cut remains in doubt, the point at which monetary policy is finally loosened is probably not all that far away."
The midcap FTSE 250 dropped 0.3%, adding to losses from before the BoE decision.
Both the FTSE indexes ended January with their worst monthly performance since October 2023, as investors reined in bets of aggressive interest rate cuts this year.
Wall Street closed sharply lower on Wednesday after the Fed held interest rates steady, while dashing hopes for a cut as soon as March.
Shell climbed 2.4% to a more than three-week high after the energy major increased its dividend by 4% and extended its share repurchases following a better-than-expected fourth-quarter adjusted profit.
Reporting by Sruthi Shankar in Bengaluru; additional reporting by Shashwat Chauhan, Editing by Sherry Jacob-Phillips, Shounak Dasgupta and Shinjini Ganguli
Source: Reuters