FTSE Flat on the Day as Market Awaits BoE MPC Meeting
The BoE is forecast to keep interest rates on hold today as uncertainty over the economy rises.
- BoE to take cautious stance
- Uncertainty over trade tariffs and tax hikes
- Analysts forecast 3 cuts in 2025
The FTSE started the day with some volatility, trading down to 8,695 and as high as 8,742, a range of over 1%. The index is now trading with little change on the day as investors await the MPC.
BoE Caution on Interest Rates
Analysts see the BoE keeping interest rates on hold today as the central bank considers the impact of incoming trade tariffs from the US as of April 2.
The MPC, which meets today, is also concerned about the employer tax hikes and the effect it may have on inflation.
The BoE last cut rates in February to 4.5%, lagging behind its peer the ECB. Higher interest rates in the UK have been a drag on the economy.
Last month the central bank raised its inflation expectation to 3.7% from 3% in January. Some analysts see inflation as high as 4% in 2025.
Today’s data for average earnings showed a less than expected rise of 5.8% compared to forecasts of 5.9%. And lower than last month’s increase in wages of 6.1%.
FTSE Live Chart
Analysts Forecast 3 More cuts
Today’s PMC meeting is forecast to keep interest rates on hold by 61 economists surveyed by Reuters.
The same survey showed that the economists polled expect 3 more cuts this year. The timing of the cuts would be for the May meeting and then again in August and November.
Whereas the pricing in the gilt markets shows that investors only see 2 more interest rate cuts for 2025.
Most of the rally of 2025 has been fueled by the forecast that the BoE would follow the ECB on lower rates.
To keep the FTSE higher there would need to be the perception that further cuts are still on the table.
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