Investing
FTSE 100 cuts losses after massive BoE rate hike
Published by Jessica Weisman-Pitts
Posted on November 3, 2022
2 min readLast updated: February 3, 2026
Global Banking & Finance Review®
Company
Published by Jessica Weisman-Pitts
Posted on November 3, 2022
2 min readLast updated: February 3, 2026
By Johann M Cherian
(Reuters) – UK’s exporter heavy FTSE 100 index pared losses on Thursday, as the pound extended falls after investors viewed the Bank of England’s large interest rate hike as the biggest in its monetary tightening pace.
The FTSE 100 fell 0.6%, after dropping nearly 1% earlier in the day, after the BOE raised rates by 75 basis points, its biggest increase since 1989, with interest rate futures now showing the central bank’s rate to peak at 4.6% in Sept 2023 vs. 4.7% before the announcement.
The pound fell over 1%, while midcap stocks shed 1.3%.
“This will most likely mark the peak in pace of tightening, especially with the bank (BOE) highlighting financial markets are pricing too much too soon,” said Edward Hutchings, head of rates at Aviva Investors.
The central bank also noted that Britain has already entered a recession that could potentially last two years – longer than during the 2008-09 financial crisis.
A survey showed the biggest downturn since January 2021 hit British services companies last month, although it was not as severe as first estimated.
Rate sensitive banks dropped 0.6%.
Following the previous rate hike by the BoE, the Liz Truss government introduced an unpopular fiscal policy that threw markets into chaos forcing her to resign, eventually leading to Rishi Sunak being elected as prime minister.
This comes as global financial markets reel from the fourth straight 75-bps-hike by the Federal Reserve, with it also flagging the “ultimate level” of the benchmark policy rate would likely be higher than previously estimated.
Among stocks, RS Group Plc fell 9.2% after it said that CEO Lindsley Ruth would be taking a leave of absence from the business.
Britain’s second-biggest supermarket group, Sainsbury, rose 5.7% after it retained its financial guidance for this year.
(Reporting by Johann M Cherian and Shreyashi Sanyal in Bengaluru; Addiotional reporting Susan Mathew; Editing by Subhranshu Sahu, Savio D’Souza and Shailesh Kuber)
The FTSE 100 is a stock market index that represents the 100 largest companies listed on the London Stock Exchange, measured by market capitalization.
A rate hike refers to an increase in interest rates set by a central bank, which can influence borrowing costs and economic activity.
Monetary policy is the process by which a central bank manages the supply of money and interest rates to achieve specific economic objectives.
A recession is a significant decline in economic activity across the economy, lasting longer than a few months, typically reflected in GDP, income, employment, and production.
Interest rate futures are financial contracts that allow investors to speculate on the future direction of interest rates, providing a way to hedge against rate changes.
Explore more articles in the Investing category
