British equities finished the day on a negative note on Thursday following the Bank of England's widely anticipated decision to lower interest rates. The blue-chip FTSE 100 index closed down 0.32%, reflective of a challenging earnings season. The Monetary Policy Committee of the BoE made an almost unanimous decision to adjust the bank rate from 5% to 4.75%.
This move was attributed to ongoing progress in disinflation. The British central bank now predicts inflation will rise to 2.75% over the coming year, before reverting back to the targeted 2%. Experts at Berenberg stated, "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 Bank Rate on hold at 4.25% after two more cuts." In other economic developments, average house prices in the UK saw an uptick of 0.2% in October, marking the fourth consecutive month of growth, as reported by Halifax.
The financial service firm noted that Northern Ireland is the leading contributor to annual house price growth across the UK. On the corporate side, Auto Trader Group ($AUTO.GB) experienced the most significant decline among London-listed blue-chip companies, plummeting by 7.16% following the release of its first-half fiscal results.
The UK automotive platform indicated reduced sales volumes compared to already low figures from the previous year, attributing this to ongoing difficulties in the new car retail market. RBC Capital Markets commented, "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.".