In the UK, inflation data came in with a positive surprise on Wednesday. Prices unexpectedly fell in August, despite most analysts anticipating a rise due to higher energy prices.

While most investors still expected the BoE to raise rates yesterday by a quarter point to 5.5% from 5.25% - thinking that it could be the last one in this cycle – the BoE surprised them by keeping its rates unchanged. This was a close decision, with a 4-5 split. It was the first pause after 14 consecutive rate rises since the start of the tightening cycle in December 2021. However, the Bank was very clear is that the Bank is leaving all options on the table for November. In a statement, Governor Andrew Bailey said: “Inflation has fallen a lot in recent months, and we think it will continue to do so. That’s welcome news. But there is no room for complacency. We need to be sure inflation returns to normal and we will continue to take the decisions necessary to do just that.”

UK stocks struggled for direction this morning, after Goldman Sachs said it expected the BoE to keep its benchmark rate at 5.25% in November and maintain it at this level until the third quarter of 2024.

AstraZeneca was up 1.9% after it announced its experimental precision drug slowed the progression of breast cancer in trials.

Phoenix Group fell 3% after J.P. Morgan downgraded the stock.

Things to read today:

Rupert Murdoch resolves his own succession drama – for now (Financial Times)

Marcus Ashworth: BOE Waves the White Flag in Inflation Battle (Bloomberg)

Rising Bond Yields, Interest-Rate Worries Drag Stocks Lower (WSJ)