London close: Stocks rally as BoE stands pat on rates

17th Sep 2026 15:39

(Sharecast News) - London stocks rallied on Thursday after the Bank of England stood pat on interest rates as expected, but also signalled that hikes were on the cards.

The FTSE 100 closed up 1.2% at 10,816.14, while Brent crude was down 2.3% at $103.45 a barrel and West Texas Intermediate was 1.4% lower at $101.01.

The BoE held rates at 3.75% for the sixth meeting in a row. The Monetary Policy Committee voted by a majority of 6-3 to keep rates on hold, with the three dissenters - Megan Greene, Catherine Mann and Huw Pill - favouring a 25 basis points hike.

The Bank said the six members who voted to keep rates unchanged were concerned about recent developments in a range of energy prices and their impact on holding CPI inflation above target for longer than had been previously expected.

"Domestic activity and tight financial conditions were restraining inflationary pressures, but the risk of second-round effects was growing in the absence of a lasting resolution of the conflict," it said. "Two members in this group (Swati Dhingra and Alan Taylor) acknowledged these risks, but placed particular weight on the role of slack in moderating inflation, evidence of restrained pass-through of costs to prices, and the restrictive level of Bank Rate, all of which would allow more time to observe further evidence."

Meanwhile, the three hawks in favour of a hike noted that the escalation and duration of the Middle East conflict continued to raise energy and food prices.

"Global factors such as AI supply constraints and El Niño would provide inflationary pressure as well. A projected surge in inflation would peak in early 2027, just as wage settlements were agreed," the BoE said. "A mitigating factor for second-round effects, slack in the labour market and economy, appeared to have peaked already given stronger GDP growth and indications of an expansion in employment. This increased the likelihood of meaningful second-round effects emerging. For these members, risk management was appropriate."

The BoE said the trio believed that a proactive increase in Bank Rate would help anchor inflation expectations.

The Bank also confirmed that it will pause government bond sales for the next six months and halt sales of long-dated gilts entirely.

Danni Hewson, head of financial analysis at AJ Bell, said: "The FTSE 100 extended its gains through the course of Thursday despite the Bank of England accompanying its decision to hold rates with a warning of potential hikes to come.

"The market is well aware of the direction of travel on rates, which bond markets have been signalling for months since the Iran war got underway.

"Plus, the Federal Reserve's decision to hike rates for the first time since 2023 and its clear messaging about tackling inflation has helped the central bank regain some credibility with markets after a testing start to chair Kevin Warsh's tenure.

"The Bank of England vote was split between six members seeking to hold rates steady and three voting for an immediate hike to 4%. Governor Andrew Bailey warned that the longer the current energy crisis persists the likelier it is rates will have to go up to tackle inflationary pressures.

"The Bank is pausing sales in the open market of its government debt stockpile which helped drive down bond yields.

"Yields also eased thanks to lower oil prices, with Brent crude falling below $102 per barrel at one point on hopes supplies from the region can be dialled up despite the ongoing conflict between Tehran and Washington."

In equity markets, clothing and homeware retailer Next gained as it lifted its full-year profit guidance by £12m to £1.25bn but also cut its UK sales growth forecast to 2% from 2.8% for the second half.

B&Q and Castorama owner Kingfisher was higher after Deutsche Bank upgraded the shares to 'hold' from 'sell' and lifted the price target to 300p from 260p. DB said there had been a sequential improvement in its tracked data points despite overall weakness in the European consumer outlook.

Bytes Technology surged as it lifted its FY27 outlook following a better-than-expected performance in the first half of the year.

Man Group was boosted by an upgrade to 'buy' from 'neutral' at UBS, which lifted the price target to 365p from 335p, pointing to a solid performance from AHL, the company's suite of trend-following funds.

Drax rose as it said full-year adjusted EBITDA was set to be around the top of the range of consensus estimates of £680m to £711m.

Market Movers

FTSE 100 (UKX) 10,816.14 1.19%

FTSE 250 (MCX) 24,352.14 1.17%

techMARK (TASX) 6,150.62 0.79%

FTSE 100 - Risers

National Grid (NG.) 1,157.50p 4.28%

Anglo American (AAL) 4,053.00p 3.45%

SSE (SSE) 2,487.00p 3.41%

Fresnillo (FRES) 3,004.00p 3.05%

Kingfisher (KGF) 309.40p 2.93%

Airtel Africa (AAF) 356.60p 2.83%

Scottish Mortgage Inv Trust (SMT) 1,519.00p 2.77%

Rolls-Royce Holdings (RR.) 1,479.80p 2.71%

The Sage Group (SGE) 1,034.00p 2.63%

Severn Trent (SVT) 3,076.00p 2.60%

FTSE 100 - Fallers

Pershing Square Holdings Ltd NPV (PSH) 3,666.00p -1.93%

Marks & Spencer Group (MKS) 365.00p -1.64%

Coca-Cola Europacific Partners (DI) (CCEP) 7,600.00p -1.43%

Reckitt Benckiser Group (RKT) 5,006.00p -0.99%

IG Group Holdings (IGG) 1,315.00p -0.68%

Intertek Group (ITRK) 5,840.00p -0.60%

Autotrader Group (AUTO) 496.80p -0.56%

Babcock International Group (BAB) 1,017.50p -0.49%

JD Sports Fashion (JD.) 76.32p -0.39%

Smith & Nephew (SN.) 1,035.50p -0.38%

FTSE 250 - Risers

Bytes Technology Group (BYIT) 450.00p 12.00%

Ocado Group (OCDO) 227.40p 6.66%

Man Group (EMG) 336.80p 6.38%

Taylor Wimpey (TW.) 80.98p 6.13%

Bridgepoint Group (Reg S) (BPT) 302.80p 5.87%

Pan African Resources (PAF) 127.10p 5.39%

Oxford Nanopore Technologies (ONT) 170.80p 5.24%

WH Smith (SMWH) 383.00p 5.10%

Seraphim Space Investment Trust (SSIT) 190.20p 5.08%

B&M European Value Retail (BME) 246.00p 4.68%

FTSE 250 - Fallers

Foresight Group Holdings Limited NPV (FSG) 446.00p -4.09%

Vistry Group (VTY) 271.60p -3.48%

THG (THG) 25.96p -3.42%

Hansa Investment Company Limited (DI) (HAN) 328.00p -2.96%

Unite Group (UTG) 473.60p -2.51%

Trustpilot Group (TRST) 216.80p -2.43%

GB Group (GBG) 156.40p -1.76%

Currys (CURY) 148.00p -1.73%

Rank Group (RNK) 86.50p -1.70%

Rightmove (RMV) 496.90p -1.49%