Sharecast – The pan-European index was 0.69% higher at 1204 GMT as eyes now turned to rate decisions from the European Central Bank.
UK rates were lifted to 4%, the highest level in more than 14 years, from 3.5% – the 10th hike in a row after Bank governor Andrew Bailey dismissed rising inflation as transitory. Rates are now at the highest level since October 2008, although the bank hinted that inflation may have peaked domestically and globally.
“Global consumer price inflation remains high, although it is likely to have peaked across many advanced economies, including in the United Kingdom,” the BoE said after the rate announcement.
“Wholesale gas prices have fallen recently and global supply chain disruption appears to have eased amid a slowing in global demand. Many central banks have continued to tighten monetary policy, although market pricing indicates reductions in policy rates further ahead.”
In the US rates were increased by a quarter percentage point as Fed chief Jerome Powell said the central bank was making progress on tackling inflation, but more rises were on the way.
In other economic news, German exports fell more than expected in December as the impact of high inflation and the war in Ukraine hit trade, according to official data released on Thursday.
Exports fell by 6.3% compared with November, while imports fell by 6.1%.
For the full calendar year, exports rose 14.3% on 2021 on a seasonally-adjusted basis. Imports gained by 24.3%, driven by increased energy prices due to Russia’s unprovoked invasion of Ukraine.
There were signs that supply chain issues might be easing in Europe’s largest economy as data showed materials shortages had decreased in German manufacturing, according to a survey by the Ifo economic institute.
In January, 48.4% of companies surveyed reported problems, down from 50.7% in December, Ifo said.
“Given the mild winter recession that’s emerging, we would’ve liked to see a stronger decline,” Ifo’s head of surveys Klaus Wohlrabe said in a statement.
In equity news, Shell (LON:) shares gained as the company posted a stonking $40bn annual profit on the back of surging gas prices driven by the war in Ukraine. The news renewed calls for the UK government to reform its windfall tax measures again as consumers prepared for a 40% rise in energy costs this April.
ING shares fell despite the Dutch bank reporting better-than-expected results.
British gas owner Centrica (LON:) fell after an undercover newspaper investigation found the energy company was sending debt collectors to break into the homes of vulnerable customers and force-fitting prepayment meters.
Reporting by Frank Prenesti for Sharecast.com
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