UK Rates on Hold, Pound Flat

Marcus Jacob
07 Apr, 2011
New York City

UK indexes were flat and the Bank of England left its key lending rate on hold. The central bank also left its bond buying program on hold as inflation hovered at 4.4%, twice the target range. The pound was flat after the decision.

[R]12:50 PM London – UK indexes were flat and the Bank of England left its key lending rate on hold. The central bank also left its bond buying program on hold as inflation hovered at 4.4%, twice the target range. The pound was flat after the decision.[/R]

Bank of England left key lending rate at record low of 0.5% despite the inflation running at more than twice the central bank’s target rate at 4.4%.

The decision to leave the rate on hold comes after a two-day meeting that also decided the fate of its bond buying program. The central bank left its money printing program at £200 billion or $235 billion unchanged.

The central bank’s rate setting committee in March left its key lending rate at 0.5% in a 6-to-3 vote and noted rising inflation pressure.

Separately, the European Central Bank lifted its key lending rate to 1.25%, an increase of 25 basis points to stave off much smaller inflation of 2.6%.

The pound edged lower after the rate decision to $1629 from $1.633 before the rate decision.

FTSE 100 index increased 1.36 to 6,042.49 and All-Share index declined 3.29 to 3,130.34

Stock Movers

Braclays increased 4.050 pence to 299.30 pence after banks in Germany and Italy decided to raise capital.

Carpetright declined 27.50 pence to 644.00 pence after the company guided pre-tax profit for the year to April is going to be in “in-line” with 2009 earnings. The retailer earlier had guided lower than 2009 earnings.

Lloyds Banking Group increased 0.87 pence to 62.83 pence after Intesa Saopaolo in Italy and Commerzbank in Germany announced plans to raise as much as $18 billion.

Mondi declined 1.5 pence to 605 pence after the paper and packaging company said it will divest is South African packaging business.

Talvivaara Mining Company dropped 36 pence to 544 pence after the Finnish miner revised 2011 nickel production downwards by 5,000 tons and 8,000 tons to between 22,000 tons and 28,000 tons.

Victrex declined 9 pence to 1,439 pence after the plastics group said it sold 22% more to 1,434 tons of plastics in the first half on 10% increase to 752 tons in the second quarter.

Of the stocks in the FTSE 250 index, Royal Bank of Scotland Group increased 1.5% to 43.40 pence followed by increase in HSBC Holdings of 1.4% to 669.70 pence and Lloyds Banking Group of 1.1%.

Of the stocks in the index, GKN led the decliners with a loss of 3.5% to 201.90 pence, followed by losses in 3i Group of 3% to 274.40 pence, in Vedanta Resource of 2.9% to 2,426 pence.