Britain’s domestically-focused stocks have reached a two-year high as traders bet on the Bank of England cutting interest rates for the first time in four years. The midcap FTSE 250 index climbed by 0.6% to 21,486.01, marking its highest level since February 2022 amid growing optimism in money markets. The flagship FTSE 100 also saw an increase, rising by 0.9% to 8,365.42, its highest point in two months. Derivatives trades indicate a roughly 56% chance of an interest rate cut, despite recent data showing persistent inflation in services.
The Bank of England has maintained interest rates at a 16-year high of 5.25% since August last year, aiming to reduce inflation, which has now dropped to the 2% target. Global market sentiment was positive today, with Asian markets rising after tech shares rebounded on Wall Street last Friday. This followed a US inflation report that reinforced expectations for a rate cut in America in September.
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