The UK’s FTSE 100 index rose 1.88% at closing on Thursday amid a regional rally in Europe on the back of the Bank of England’s March meeting, which resulted in the bank rate being kept at 5.25%, as widely expected.
The BoE’s Monetary Policy Committee said the bank rate needs to remain restrictive for sufficiently long in support of its objective of bringing back inflation to 2% in the medium term.
“The MPC remains prepared to adjust monetary policy as warranted by economic data to return inflation to the 2% target sustainably. It will therefore continue to monitor closely indications of persistent inflationary pressures and resilience in the economy as a whole, including a range of measures of the underlying tightness of labour market conditions, wage growth and services price inflation. On that basis, the Committee will keep under review for how long Bank Rate should be maintained at its current level,” the committee said following its decision.
Speaking of interest rates, the US Federal Reserve also maintained the federal funds rates between 5.25% and 5.5%, as expected. The Fed noted that future decisions will consider incoming data, the evolving outlook and the balance of risks, adding that no easing will happen until it is more confident that inflation is sustainably moving toward its 2% target.
Meanwhile, Switzerland became the first major economy to ease monetary policy as the Swiss National Bank surprised with a 0.25 percentage-point reduction in its policy rate to 1.5%.
In other economic news, growth in the UK’s private sector output continued in March, albeit at a slower pace, according to S&P Global. The S&P Global Flash UK PMI Composite Output Index came in at a two-month low of 52.9, compared with 53 in the previous month. The country’s services sector remained in growth territory, standing at 53.4 compared with the prior month’s 53.8, while the manufacturing industry saw an improvement in activity, with the index up to 49.9 from 47.5.
“A further robust expansion of business activity ended the economy’s best quarter since the second quarter of last year. The survey data are indicative of first quarter GDP rising 0.25% to thereby signal a reassuringly solid rebound from the technical recession seen in the second half of 2023,” commented S&P Global Market Intelligence Chief Business Economist Chris Williamson.
On the corporate front, Next said profit attributable to equity holders and revenue both increased on an annual basis in the 52 weeks ended Jan. 27, 2024. For fiscal 2025, the British fashion retailer’s profit guidance is 980 million pounds sterling, up 4.6%. At closing, Next gained 6.67%.
