Interest rates kept on hold with Bank of England alert to ‘highly unpredictable' world
The Bank Of England 's Monetary Policy Committee decided to keep UK Interest Rates unchanged at 4.25%.
The decision was made following a split vote, with six members opting to hold rates and three preferring a cut.
Bank governor Andrew Bailey stated that Interest Rates remain on a gradual downward path, but the world is highly unpredictable.
The MPC emphasized that a gradual and careful approach to reducing borrowing costs continues to be the right course of action.
The Bank is closely monitoring signs of softening in the labour market, such as slower hiring and easing wage growth, for their impact on UK inflation.
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The Independent
29 minutes ago
- The Independent
Stocks dip as Bank of England leaves interest rates unchanged
London's FTSE 100 closed lower on Thursday amid ongoing Middle East concerns, after the Bank of England left interest rates unchanged at 4.25%. The FTSE 100 index closed down 51.67 points, 0.6%, at 8,791.80. The FTSE 250 ended 216.27 points lower, 1.0%, at 21,073.99, and the AIM All-Share fell 5.17 points, 0.7%, at 758.19. The London Stock Exchange celebrated the 30th anniversary of AIM on Thursday, calling it a 'cornerstone' of the UK's capital markets. Since its launch in 1995, AIM has become one of the world's most successful growth markets, helping more than 4,000 companies raise over £136 billion. The decision to hold rates by the Bank's Monetary Policy Committee was widely expected, although the vote split was slightly more dovish than forecast. The MPC voted 6-3 for the status quo, with Swati Dhingra, Bank deputy governor Dave Ramsden and Alan Taylor preferring a 25 basis point rate cut to 4.00%. The Bank said there remain 'two-sided' risks to inflation meaning 'a gradual and careful approach to the further withdrawal of monetary policy restraint remains appropriate'. The Bank noted that higher food prices could raise 'inflation expectations, impacting wage and price-setting behaviours'. Bank of England governor Andrew Bailey said interest rates remain on a 'gradual downward path'. Ebury analyst Matthew Ryan said: 'The BoE still appears to be in no hurry to speed up the pace of policy loosening. Importantly for markets, the phrase that cuts will be both 'gradual and careful' was retained in the statement – there was some speculation that this could be either tweaked or jettisoned.' ING noted past experience has shown that the vote split contains few useful signals. 'December's meeting saw a similar 6-3 vote, yet heralded little change in the bank's overall stance,' ING said. It added that rate hawks will have an eye on oil prices. A 'serious spike in oil prices is the most obvious hawkish risk for the UK rate outlook', ING said. Nonetheless, ING expects the Bank to cut interest rates in August. The oil price rose again amid concerns the situation in the Middle East could worsen. Brent oil traded higher at 78.59 US dollars a barrel late on Thursday from 75.06 dollars on Wednesday as the Israel-Iran conflict continued. The oil price rise boosted oil majors and FTSE 100 heavyweights BP and Shell, which rose 1.4% and 1.1% respectively, but weighed on British Airways owner IAG, down 3.2% and low-cost airline easyJet, down 3.0%, on concerns of rising fuel costs and travel disruption. Israel's defence minister Israel Katz said Iran's Supreme Leader Ayatollah Ali Khamenei cannot 'continue to exist', days after reports that Washington vetoed Israeli plans to assassinate him, AFP reported. 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Anglo American fell 3.3%, Antofagasta declined 3.4% and Rio Tinto dipped 2.5%. Whitbread fell 1.6% after reporting total group sales fell by 3.8% to £710.9 million in the 13 weeks that ended May 29, the first quarter of its financial year, from £739.2 million a year earlier, or by 1% on a like-for-like basis. Total UK sales were down 5.4% to £648.2 million from £685.2 million. Accommodation sales fell 1.8% to £485.0 million from £494.1 million, while food and beverage revenue sales dropped 15% to £163.2 million from £191.0 million. UK revenue per available room fell 2.4% to £62 in the quarter from £63.54 a year ago. On the FTSE 250, Hays plunged 10% after saying it expects annual profit to be below market consensus, as the staffing firm grapples with challenging market conditions. AJ Bell's Russ Mould said the share price slump implies the jobs market is going from bad to worse. 'Companies are clearly worried about the economic outlook and they're reluctant to take on full-time staff, potentially not replacing anyone lost to natural turnover. At the same time, individuals are worried that if they move job they'll be in the 'last in, first out' firing line if companies look for new cost savings,' he added. Hays said permanent recruitment markets have been particularly damaged, amid 'low levels of client and candidate confidence'. Simon Lechipre, analyst at Jefferies, said the weaker than expected performance is particularly negative for Page Group where permanent recruitment makes up 72% of group fees. Shares in PageGroup fell 8.8% while Robert Walters dropped 4.8%. Hays expects annual pre-exceptional operating profit of £45 million, below company-compiled consensus of £56.4 million. The yield on the US 10-year Treasury was quoted at 4.39%, stretched from 4.36%. The yield on the US 30-year Treasury was quoted at 4.89%, widened from 4.86%. Gold was quoted lower at 3,368.94 dollars an ounce against 3,387.84 dollars. The biggest risers on the FTSE 100 were Melrose Industries, up 13.70p at 499.9p, BP, up 5.5p at 392.0p, Bunzl, up 28.0p at 2,250.0p, Shell, up 28.5p at 2,695.5p, and Vodafone, up 0.6p at 75.9p. The biggest fallers were Persimmon, down 50.0p at 1,317.0p, Antofagasta, down 60.0p at 1,699.0p, Anglo American, down 68.5p at 2,021.5p, IAG, down 10.2p at 309.3p, and Airtel Africa, down 5.4p, at 171.2p.
Reuters
31 minutes ago
- Reuters
France tightens grip on Eutelsat through 1.35 bln-euro shares sale
PARIS, June 19 (Reuters) - The French state will become Eutelsat's ( opens new tab top shareholder following a 1.35 billion-euro ($1.55 billion) capital increase aimed at helping the satellite company better compete with Elon Musk's Starlink, the finance ministry said on Thursday. The capital injection will deliver a shot in the arm to debt-laden Eutelsat, which has garnered unprecedented attention this year from European governments looking for alternatives to compete with Elon Musk's Starlink. France's state shareholding agency will inject 717 million euros, or more than half of the sum, into the company, the ministry said. The agency will also acquire the stake held by France's state-owned investment bank Bpifrance in Eutelsat as part of the company, a government official said, bringing France's total stake to 29.99%. "The French government is proud to support Eutelsat. By participating in its capital increase, we are supporting a decisive stage in its development. Satellite connectivity is a strategic issue for our industrial and digital sovereignty," Finance Minister Eric Lombard said. ($1 = 0.8721 euros)
Reuters
32 minutes ago
- Reuters
ECB's Nagel says savings union more urgent than banking union
MILAN, June 19 (Reuters) - Creating a European Union savings union has become a matter of urgency, European Central Bank policymaker and Bundesbank President Joachim Nagel said on Thursday, adding a closer banking union could follow after that. European policymakers are seeking to foster deeper and more integrated capital markets across the often fragmented 27-member bloc. As part of that, they are pursuing a "savings and investments union" to try to encourage retail investors to fund the investments in energy, defence and technology European needs to bridge the productivity gap with the United States and China. Europe has fallen behind the other major global economic powers, posing a threat to its citizens' living standards. Given growing competition among economic blocs and tense relations with the United States, where a large portion of European savings has typically been invested, Nagel said there was no time to lose. "I think the first step, I believe this is of utmost importance, is to establish the savings and investment union, to do much more here. I think this is now of utmost importance," Nagel told a student conference in Milan. "And then in the next step, we can do the banking union," he said. Speaking at the same conference, UniCredit ( opens new tab CEO Andrea Orcel said the EU needed to become more competitive, which he has perviously said would happen if European banks were allowed to grow in size to better compete with U.S. rivals. Orcel, whose ambitions to take over Commerzbank ( opens new tab have stalled due to strong German opposition, complained about the barriers raised by European governments against the bank's consolidation efforts. Nagel said he shared Orcel's view about the need for Europe to become more competitive, and reiterated his support for a banking union. But he said he thought the banking union was first of all about more uniform rules across different markets, with countries adopting a neighbour's best practice standards wherever necessary, and then consolidation could follow.
