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FTSE 100 drops ahead of massive BoE hike, hit by Fed nerves

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UK’s FTSE 100 fell on Thursday, ahead of what will likely be the Bank of England’s biggest interest rate hike in over three decades and as the Federal Reserve doused hopes for a pause in its aggressive monetary policy tightening.

The blue-chip FTSE 100 fell 0.3%, extending losses from the previous session, while the mid-cap FTSE 250 shed 0.3% by 0933 GMT.

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The BoE is expected to raise rates by another 75 basis points (bps) at 1200 GMT as it battles the highest inflation in four decades.

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“The BoE unfortunately doesn’t have a fiscal statement to work out how much of the corrector pen it needs to try and erase inflation, but they already have a pretty clear timetable laid out,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

The Fed raised rates by 75 bps, as expected, on Wednesday and said it could raise rates in smaller increments in the future, before Fed Chair Jerome Powell soured the mood by saying the “ultimate level” of the benchmark policy rate would likely be higher than previously estimated.

“It’s after the Fed told investors to hold their horses on expectations about lower rate hikes that the initial jump of optimism waned,” Streeter said.

British miners slipped 2.3% after copper prices dropped due to a challenging demand outlook.

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RS Group Plc fell 9.2%, to the bottom of the FTSE 100, after it said that CEO Lindsley Ruth would be taking a leave of absence from business.

BT fell 7.8% after the broadband and mobile operator increased its savings target by 500 million pounds.

Britain’s second-biggest supermarket group, Sainsbury , rose 3.4% after it retained its financial guidance for this year.

A survey showed the biggest downturn since January 2021 hit British services companies last month, although it was not as severe as first estimated. (Reporting by Johann M Cherian in Bengaluru; Editing by Subhranshu Sahu and Savio D’Souza)

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