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Stocks rise on interest rate and stimulus hopes

Bank of EnglandThur: Stocks advanced on the Bank of England hinting at a longer period of unchanged interest rates and prospects of further stimulus from the European Central Bank.

The BoE’s Monetary Policy Committee voted 8-1 to maintain rates at 0.50% and its asset purchase programme at £375bn, as expected. Policymaker Ian McCafferty again voted for an interest rate increase of 25 basis points.

The Bank said weak inflation, low wages and the potential risks from a slowdown in emerging markets were reasons for the no-change decision.

Some analysts have now pushed their expectations for a rate hike to end of 2016, including Ernst and Young. “In our view, disinflationary forces will prove to be more intense than the MPC expects, with a rate rise unlikely to happen until the latter part of 2016,” said Martin Beck, senior economic advisor to the EY ITEM Club.

The FTSE100 closed up 38 points at 65,374.

Minutes of the Federal Reserve‘s 16-17 September meeting will be issued at 7pm tonight and will be closely scrutinised.

Fed Chair Janet Yellen has said policymakers expected an increase at its October or December meetings this year but last Friday’s weaker-than-anticipated non-farm payrolls report prompted some analysts to push back their expectations until next year.

In company news Rolls-Royce rallied after saying it will step up plans to establish an Asian manufacturing capability to help the group double production with the introduction of new Boeing Co. and Airbus Group SE jets.

EasyJet rose 1.9% and IAG 1% after Air-France-KLM‘s report that total group traffic for September was up 22%.

Ladbrokes gained after appointing Kristof Fahy as chief marketing officer.

Hays was lower as the recruitment company said currency movements have had an impact on its quarterly earnings.

Glencore declined on fresh fears over the company’s mounting debt and the repercussions it could have on the banking sector.

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