nterest rates are today set to reach 1% for the first time in 13 years as Bank of England policymakers battle rampant inflation.
The predicted 0.25% rise will be announced at noon alongside the Bank’s updated economic forecasts.
Last night, the US Federal Reserve increased its key rate by 0.5% but Wall Street markets rose sharply as the tone of comments from chairman Jerome Powell proved to be less hawkish than traders had feared.
In another busy day for corporate updates, Shell today revealed that profits had jumped 182% to $9.1 billion (£7.3 billion) as it benefited from the surge in oil and gas prices in the first three months of the year.
Federal Reserve reassurance lifts markets
The biggest rise in US interest rates since 2000 was met with a 3% surge for major Wall Street indices by last night’s close.
The rally came as traders welcomed reassuring comments from Federal Reserve chairman Jerome Powell on monetary policy over the rest of the year.
He ruled out going any faster than a half a point rise at any one meeting, silencing those who feared that the Fed may have to hike by as much as 0.75% in order to bring inflation back under control.
Policymakers yesterday increased the Fed’s key rate by 0.5% to an upper limit of 1%, adding that the process of balance sheet reduction will begin in June.
The less aggressive stance indicated by Powell helped to act as a drag on the US dollar, pulling it back sharply from its 20-year highs, while bond yields also fell sharply. The Nasdaq, which has weakened on the back of interest rate worries, rose 3%.
The improved performance is likely to see markets in Europe open higher, despite fresh economic concerns in China after figures covering services sectpr activity plunged to a two year low.
The Bank of England interest rates decision is due at noon, with City traders having a minimum expectation of a quarter point rise to 1% but not ruling out a half point increase to 1.25%.
Ahead of the announcement, CMC Markets has forecast that the FTSE 100 index will open 80 points higher at 7573.
Credit: www.standard.co.uk /