FTSE 100 close: London index slips after of Bank of England interest rate hike

London’s FTSE 100 slipped lower today after the Bank of England’s hiked interest rates for the eleventh time in a row.

The capital’s premier index dropped 0.89 per cent to just under 7,500 points, while the domestically-focused mid-cap FTSE 250 index, which is more aligned with the health of the UK economy, lost 0.15 per cent to close at 18,729.96 points.

The monetary policy committee (MPC) backed a 25 basis point rate increase, taking them to 4.25 per cent, a post-financial crisis high.

New numbers out yesterday from the Office for National Statistics revealed inflation is running far above the Bank of England and the City’s forecasts, holding in the double digits last month at 10.4 per cent.

That upside shock added pressure on Governor Andrew Bailey and co to tighten financial conditions once again earlier today.

Last night, the US Federal Reserve kicked borrowing costs 25 basis points higher to a range of 4.75 per cent and five per cent, but singalled they are nearing the end of the rate hike cycle due to the recent banking turmoil doing some of the monetary tightening for them.

“The Fed also acknowledged that the recent chaos within the banking sector could also lead to tightening of its own, should banks decide to toughen lending standards to consumers and businesses,” Richard Hunter, head of markets at interactive investor, said.

Britain’s largest banks led the FTSE 100 lower this morning, indicating investors are still concerned about the fallout of Credit Suisse being pawned off to its rival UBS and Silicon Valley Bank’s collapse.

HSBC shed nearly three per cent, while Barclays closed down just over two per cent.

The pound strengthened 0.5 per cent against the US dollar on the prospect of another BoE rate rise today and the Fed coming to the end of its hiking campaign.

Oil prices slimmed around 0.4 per cent.