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BoE holds interest rate | Wood’s steady start
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5pm: Shares on Bank statement
The FTSE 100 rose on Thursday, led by mining and healthcare-related stocks as the Bank of England kept its monetary policy unchanged.
At the close, the UK blue-chip index was 35.91 points, or 0.5% firmer at 7,009.97.
Noon: Bank holds rates
The Bank of England’s monetary policy committee has held interest rates at 0.1%.
The MPC voted 9-0 to keep rates steady, despite concerns that inflation could surge in the wake of the pandemic. It was last meeting for chief economist Andy Haldane (pictured) who again voted for a cut asset purchases this year from £150bn to £100bn.
The MPC thinks the economy will grow 5.5% in Q2, up from 4.25% expected in May. CPI inflation is predicted to exceed 3%, compared to a peak of 2.5% previously forecast.
There was a risk inflation could pick up even more, it said. But with higher prices expected to be primarily driven by energy and commodity, the committee stuck to the view that above-target inflation should be temporary.
Luke Bartholomew, senior economist at Aberdeen Standard Investments, said: “The decision was as expected, with Haldane once again expressing his concerns about the inflation outlook by voting for a reduction in the size of government bond purchases.
“It will be extremely interesting to see who replaces Haldane in the Chief Economist role following his imminent departure. It is likely the Bank will drift back into a more relaxed tone on the transitory nature of any inflation pressure once Haldane’s voice and vote has moved on.”
Martin Beck, senior economic adviser to the EY ITEM Club, said: “The EY ITEM Club shares the MPC’s view that inflation should settle back to around 2% in the medium term.”
Rates have been unchanged since March last year, when they were reduced to help contain the economic impact of Covid-19.
Consumer price inflation hit a two-year high of 2.1% in the year to May, exceeding the Bank’s 2% target.
7am: Wood sees steady start
Robin Watson, chief executive of energy services group Wood, said: “Following a steady start in Q1, we have seen improving momentum in activity in Q2 with growth in Consulting and Operations compared to Q2 2020.
“We expect to deliver strong margin improvement compared to H1 2020, with a greater weighting of high margin Consulting activity and margin improvement across all business units.
“Our full year outlook is unchanged with trading momentum and growth in our order book, which is up c6% year-to-date driven by Consulting and Operations, giving us confidence that the group will return to growth in the second half, compared to both H1 2021 and H2 2020.
“In line with our strategic objective we anticipate growth in EBITDA margin.”
Bank of England meets to discuss inflation
Attention will be focused on the Bank of England’s response to inflationary pressures as the cost of living is now above its 2% target.
The monetary policy committee will announce its decision on interest rates and most members are broadly saying Britain’s faster price growth is likely to prove transitory.
Consensus in the City is that the MPC will leave policy unchanged at what will be the final meeting for chief economist Andy Haldane, the sole hawk on the committee. He voted at the last meeting to reduce the size of the Bank’s stimulus package.
The MPC will issue a statement at mid-day.
Last week, the US Federal Reserve began reducing its pandemic stimulus by signalling its first rate hike in 2023, a year earlier than previous projections, putting the focus on what action other central banks make take.
The Nasdaq Composite saw out Wednesday with yet another record high, closing 0.13% higher.
At the close, the Dow Jones Industrial Average was down 0.21%, while the S&P 500 was 0.11% weaker.