FTSE down as Bank of England keeps interest rates steady | LBC

The FTSE 100 declined as the Bank of England kept rates unchanged, deepening market caution after the Federal Reserve signaled possible rate increases later this year. The index closed down 108.91 points, or 1.0%, at 10,399.70, while the FTSE 250 fell 34.01 points to 23,330.72 and the AIM All-Share shed 7.79 points, 1.0%, to 800.04. The preceding US session featured a hold on rates by the Fed at 3.50-3.75% but with a hawkish tilt in its projections, showing a majority favoring at least one hike this year. Traders priced in higher odds of tightening despite expectations of cuts earlier.

BoE policymakers left the Bank Rate at 3.75% with a 7-2 vote, while chief economist Huw Pill flagged the case for a potential 25-basis-point rise at some point; Governor Andrew Bailey described the stance as appropriate for now. Currency movements showed the euro at 1.1477 dollars and the dollar at 160.99 yen. Market watchers also noted the Fed's posture reshaped expectations for year-end policy, with rate-hike odds rising on the back of the projections.