After the Fed, UK investors brace for the BoE rate decision

The mood on UK markets improved yesterday, after the British government unveiled details on its plan to support businesses with their energy bills, with electricity prices to be capped at £211 per MWH and gas prices at £75MWH between October 1st, 2023 until March 31st 2023. The FTSE 100 was up 0.63%.

The Fed unsurprisingly raised rates by 75 basis points, but Jerome Powell was a little more pessimistic than expected about the effort required, even though he believes that tight monetary policy will not lead to a recession in the US.

This morning, UK indices opened in the red, as investors brace for an aggressive rate hike by the Bank of England later today. It is widely expected to announce a 75 bps points increase. The pound sterling remains at a 37 year-low against the dollar.

Banks and insurance stocks are at the bottom of the FTSE 100. Sportswear retailer JD Sports tumbled 6.3% after it posted lower earnings for the first half.

 

Things to read today:

No ‘painless’ way to tame US inflation, warns Jay Powell (Financial Times)

Putin, Under Pressure Over Ukraine War, Turns to Familiar Escalation Playbook (WSJ)

‘He’s done’: how Donald Trump’s legal woes have just gotten a lot worse (The Guardian)