n interest rate hike of 0.5% is seen as likely today as the Bank of England takes its biggest step yet in the fight against inflation.
The City has forecast a rise to 1.75% in what will be the biggest single increase in 27 years and the first of its kind by the Bank’s Monetary Policy Committee since it was set up in 1997.
In corporate updates, retailer Next has increased its full-year profits guidance by £10 million to £860 million. It reported a surge in formalwear sales, driven by pent-up demand as social events return after the pandemic.
US markets rally, Brent crude at $96
Wall Street posted a strong session last night after corporate earnings and a better-than-expected update from the US services sector allayed recession fears.
Tech stocks led the rally as the Nasdaq surged 2.6%, ahead of 1.6% for the S&P 500 and 1.3% advance for the Dow Jones Industrial Average.
Brent crude, meanwhile, traded at $96 a barrel today after one of the smallest production increases in OPEC history saw the cartel agree to add 100,000 a barrels a day in September.
The price fell sharply yesterday as traders focused on figures showing higher US crude inventories and signs that Americans are driving less than they did in the summer of 2020.
Attention now turns to the Bank of England, where policymakers could raise interest rates by 0.5% for the first time since the Monetary Policy Committee was set up in 1997.
The Bank has hiked by 0.25% at every meeting since December, but with little sign that any of these increases have done much to slow inflation. The consumer prices index hit 9.4% in June and is poised to go much higher as energy prices rise.
Michael Hewson, chief market analyst at CMC Markets, said: “The Bank is understandably concerned about the effect that any rate rise could have on the UK economy, and it is undoubtedly slowing.
“However there is no easy option here, given they are already well behind the curve.”
CMC expects the FTSE 100 index to open unchanged at 7445.
Credit: www.standard.co.uk /