European stocks closed lower on Thursday as investors reacted to policy decisions from both the European Central Bank and the Bank of England amid persistent inflationary pressures.
In the U.K., the Bank of England on Thursday raised interest rates again — the first back-to-back rate hike since 2004 — and began the process of quantitative tightening. As expected, the BOE’s Monetary Policy Committee voted unanimously for a 25 basis point rate increase to take the main Bank Rate to 0.5%.
The central bank also warned inflation would top 7% in April, up from an earlier projection of 6%. It comes as British energy regulator Ofgem said it would raise the maximum limit on energy prices by more than 50%.
*British Finance Minister Rishi Sunak said Thursday that all households will receive a £200 discount on their electricity bills from October, which will be repayable in £40 installments over five years. He also announced a £150 rebate on council tax for the majority of households that won’t have to be paid back.*
Separately, the European Central Bank opted to hold interest rates steady, defying growing pressure to curb stimulus plans. Inflation in the euro zone rose to 5.1% in January, despite expectations for a sharp drop to 4.4%.
*What to watch this week:*
U.S. payrolls report for January, Friday
Winter Olympics kick off in China, Russia’s President Vladimir Putin due to attend opening ceremony, Friday
*Currencies*
The Bloomberg Dollar Spot Index fell 0.3%
The euro rose 1.1% to $1.1431
The British pound rose 0.1% to $1.3595
The Japanese yen fell 0.4% to 114.94 per dollar
*Bonds*
The yield on 10-year Treasuries advanced five basis points to 1.83%
Germany’s 10-year yield advanced 10 basis points to 0.14%
Britain’s 10-year yield advanced 11 basis points to 1.37%
*Commodities*
West Texas Intermediate crude rose 2.1% to $90.11 a barrel
Gold futures fell 0.2% to $1,806.80 an ounce
By: via @AlliesFin Serve Stock Market
