Bank of England Rate Cut Underpins UK Markets Amid Volatility

The Bank of England cut its benchmark rate by 25 basis points to 4 percent today—the lowest since February 2023—to counter slowing growth and rising inflation expectations. Despite the rate cut, stock markets in the U.K. stumbled; the FTSE 100 fell amid weak earnings from defence and pharmaceutical firms. Yet global equities, particularly U.S. indices, remained buoyant, supported by strong earnings momentum and hopes for forthcoming Fed rate reductions.

The divergence highlights contrasting monetary policy paths: while BOE adopts easing ahead of anticipated energy‑driven inflation, the Federal Reserve remains cautious. Corporate observers warn of potential overheating in U.S. valuations if fiscal stimulus converges with sustained rate cuts, while in the U.K., fiscal stimulus and rate relief are seen as necessary to support domestic demand.