Bank of England says it could lower interest rates more than expected, but June cut isn’t ‘fait accompli’ – as it happened

The Bank of England building in London, where the MPC will set interest rates at noon Photograph: Carlos Jasso/Reuters

5.10pm BST

Closing post

Time to wrap up….

The Bank of England has signalled it could start cutting interest rates as early as June after inflation was found to be “moving in the right direction”, as it kept borrowing costs on hold at 5.25% for the sixth time in a row.

Alongside the decision to keep rates on hold, the Bank said inflation was already on course to hit its target of 2% and would fall to just 1.6% in two years, opening the door to future cuts in interest rates.

Giving a more upbeat assessment of the economic outlook than in its February report, the Bank also suggested the UK recession had ended, predicting the economy had grown 0.4% in the first three months of the year. The Office for National Statistics will publish the official estimate of growth on Friday [7am, see you there!].

The nine members of the Bank’s rate setting monetary policy committee were split on the decision to hold interest rates, with two members – Swati Dhingra and Dave Ramsden – voting for an immediate cut to 5%. Dhingra was the lone voice calling for a rate cut at the previous meeting of the MPC.

BoE governor Andrew Bailey said he was “optimistic” that things were moving in the right direction.

Bailey told reporters in London that

• The big global shocks” that drove up inflation have faded.

• The Bank has lowered its expectations for how persistent inflation will be

• A change in Bank Rate in June is neither ruled out nor a fait accompli.

• Rates are likely to be cut in the coming quarters, and possibly by more than is currently expected by markets

Stocks in London hit fresh record highs, as investors anticipated an easing in borrowing costs soon.

Here’s the full story:

And our analysis:

Plus here’s the rest of today’s news:

Updated at 5.12pm BST

5.03pm BST

FTSE 100 ends at new closing high

The sight of the Bank of England inching towards a summer interest rate cut has pushed up London’s major stock index to a new closing high.

The FTSE 100 has ended the day at a new closing peak of 8381 points, up 0.3% today, extending its recent rally.

It had earlier hit a new intraday high of 8396 points.

Anglo American (3%), the mining giant which recent rejected a takeover approach from rival BHP, were the top riser, followed by retailer JD Sports (+2.9%) and grocery tech firm Ocado (+2.3%).

Housing stocks also had a strong day, with home builder Taylor Wimpey up 1.7% and online estate agent Rightmove gaining 2.1%.

The FTSE 100's record highs: Bubble or new bull market? https://t.co/QGTfwtfwxh via @UKValueInvestor pic.twitter.com/vcWA8JdMcP

— DH 🇫🇮🇪🇺🇺🇦 (@DividendHawk) May 9, 2024

Circa 75% of FTSE 100 companies' income derived from overseas. If BoE cuts before Fed, those dollars will be worth more pounds, and so you could see further FTSE 100 highs

— Charles Archer (@that_stocks_guy) May 9, 2024