British equities experienced a downturn on Thursday following the Bank of England's expected rate cut. The blue-chip FTSE 100 index closed down 0.32%, mirroring the ongoing earnings season. The BoE's Monetary Policy Committee made an almost unanimous decision to reduce the bank rate from 5% to 4.75%, highlighting progress in disinflation efforts.
The central bank, however, projects inflation to rise to 2.75% in the coming year before returning to its 2% target. Powerful insights from Berenberg suggest, "We continue to think that, with the labor market at capacity, strengthening demand in 2025 will cause inflation to be more stubborn than the BoE anticipates.
Against a backdrop of improved growth and above-target inflation, we forecast that the BoE will keep the Bank Rate on hold at 4.25% after two more cuts." In another development, average house prices in the UK grew by 0.2% in October, marking a fourth straight month of increases, as reported by Halifax.
The financial firm notes that Northern Ireland serves as the leading contributor to the annual house price growth throughout the UK. On the corporate side, Auto Trader Group ($AUTO.GB) faced the most significant drop among London-listed blue-chip companies, plummeting 7.16% after releasing its fiscal first half results.
The UK automotive platform noted lower volumes from already depressed levels in the previous year, facing ongoing challenges in the new car retail market. RBC Capital Markets observed, "We have confidence in Auto Trader's growth opportunity long term, through the digitalization of the used car buying journey.
However, we believe macro challenges could drive a slower pace of product and high-yield package adoption near term.".