FTSE 100 Live Updates Bank of England Holds Interest Rates at 4.5% as Stocks React
March 20, 2025 – London’s FTSE 100 (^FTSE) showed resilience on Thursday, rising 0.4% in early trading, as the Bank of England (BoE) opted to hold interest rates at 4.5% despite mounting pressure from a sluggish UK economy. Meanwhile, European markets traded mixed, reflecting cautious investor sentiment ahead of key central bank decisions.
Bank of England’s Cautious Stance
The Monetary Policy Committee (MPC) voted to maintain the benchmark rate at 4.5%, aligning with market expectations. Analysts had predicted a 96% probability of unchanged rates, citing persistent inflation risks from wage growth and geopolitical uncertainties.
Matthew Ryan, Head of Market Strategy at Ebury, noted: “The UK economy remains hamstrung by fragile business confidence and impending tax hikes. However, the MPC’s focus on sticky wage growth and inflation risks suggests a gradual easing cycle later this year.”
The decision follows the US Federal Reserve’s move to hold rates overnight, coupled with revised forecasts signaling slower growth and higher inflation.
Global Central Bank Activity
- Swiss National Bank (SNB) and Norges Bank are set to announce rate decisions later today, adding to a week of pivotal monetary policy updates.
- Federal Reserve Chair Jerome Powell emphasized “increased uncertainty” in the US economic outlook, mirroring global caution.
Market Reactions: Europe and Wall Street
- FTSE 100: +0.4% (Outperforming European peers)
- DAX (Germany): -0.2% | CAC 40 (France): -0.2%
- STOXX 600: +0.1% (Pan-European index)
- US Futures: S&P 500 (ES=F), Dow (YM=F), and Nasdaq (NQ=F) all pointed to a positive open.
Currency Movements: Pound Under Pressure
The GBP/USD (GBPUSD=X) fell 0.3% to 1.2970 as the BoE’s hold decision contrasted with the Fed’s hawkish tilt. Meanwhile, the euro (EUR=X) and GBP/EUR (GBPEUR=X) saw marginal gains.
Key Takeaways for Investors
- Inflation vs. Growth: The BoE prioritizes curbing inflation over stimulating growth, despite the UK’s stagnant output.
- Global Divergence: Central banks remain split on policy, with the Fed and BoE cautious while the ECB eyes potential cuts.
- Market Volatility: Expect choppy trading as investors digest rate decisions and geopolitical risks.