With declining inflation rate in the United Kingdom over the past few months, the Bank of England, which is the central bank of the United Kingdom, has made the plunge and reduced the interest rates in the country. The interest rates now stand at 5 per cent, compared to the previous 5.25 per cent.
Bank Of England Cuts Rates
The FTSE 100 index at the London Stock Exchange closed in red on Thursday, August 1.
When it comes to interest rate cuts, this development is monumental, as along with many central banks shoring up against rising inflation rates, the Bank of England also held interest rates up to sustain the economy.
This particular cut in rates comes after a gap of 4 years since specific economic measures were brought in during the pandemic years, when the world economy came to a virtual standstill. | BoE Governor Andrew Bailey
This particular cut in rates comes after a gap of 4 years since specific economic measures were brought in during the pandemic years, when the world economy came to a virtual standstill.
The UK yield on the 10-year gilt was last down to 3.880 per cent. In addition, the 2-year gilt yield tumbled to 3.702 per cent.
This decision comes just a few weeks after the all-important UK General Elections in July. The Labour party ousted the incumbent Conservative Party in a landslide victory.
This rate cut also comes at a time, when the US Federal Reserve, after its official meeting, declined to cut interest rates. The US interest rates continue to be in the range of 5.25 per cent-5.50 per cent.
FTSE I000 In Red Wave
However, the UK markets, particularly the marquee index of FTSE 100, declined by 1.01 per cent or 84.62 points, closing for the day at 8,283.36.
Shares of Natwest Group closed in red. |
HSBC Holdings also had a bad day at the equity markets |
Among the losers in the share market in one of the most consequential markets in the world, Melrose Industries PLC was the biggest loser with 12.53 per cent.
Standard Chartered shares in red. |
Interestingly, major banking shares also fell. Natwest group lost over 8 per cent in its value. HSBC Holding also closed in red, losing over 6 per cent. In addition, Standard Chartered, another big banking name, also lost over 5 per cent.
