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Highlights
- The BoE became the first major central bank in the world to hike its interest rates since the onset of the pandemic amid rising inflation.
- The BoE raised rates to 0.25 per cent, from its record lows of 0.1 per cent on Thursday.
- The UK’s November consumer price index had jumped to 5.1 per cent, a decade high, from October’s inflation of 4.2 per cent.
The Bank of England (BoE) became the first major central bank in the world to increase interest rates, on Thursday, 16 December, since the onset of the pandemic.
The BoE raised rates to 0.25 per cent, from its record lows of 0.1 per cent after the 9-member committee, the Monetary Policy Committee (MPC) voted for it 8 to 1. The MPC also voted unanimously to maintain the BoE’s quantitative easing (QE) programme at its target amount of £895 billion.
The move comes amid rising inflation in the country and amid the International Monetary Fund (IMF) cautioning UK policymakers to avoid ‘inaction bias’ prior to its key meeting.
The 0.25 per cent rate is now the second-lowest rate the UK’s BoE has set. Interest rates had stood at 0.75 per cent before the pandemic.
The UK’s November consumer price index (CPI) jumped to 5.1 per cent, a decade high, from the 4.2 per cent seen in October. The inflation was much higher than the BoE’s target of 2 per cent.
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In view of this, let us take a look at 3 FTSE 100 index listed stocks from interest-rate sensitive sectors such as banking, real estate and retail and explore their investment prospects:
- Lloyds Banking Group PLC (LON: LLOY)
Lloyds Banking Group is a British banking major.
The group recently stated it had passed the BoE’s stress test both the fully loaded (non-transitional) and the transitional IFRS 9 bases.
The BoE had calculated the bank’s common equity tier 1 (CET1) ratio at 7.8 per cent, beating the reference rate of 7.7 per cent.
Image source: Refinitiv
As seen in the above Refinitiv chart, Lloyds’ shares ended at GBX 46.41, up by 4.63 per cent on Thursday. The FTSE 100 index ended at 7,260.61, up by 1.25 per cent.
The company’s market cap stood at £31,497.74 million, and its one-year return to shareholders was at 27.92 per cent as of 16 December.
- Taylor Wimpey plc (LON: TW.)
Taylor Wimpey plc is a UK based housebuilding firm.
The group’s sales rate in H2 of the year-to-date in 2021 was at 0.91 homes per outlet per week, compared to 0.76 for the comparable trading period in 2020.
Image source: Refinitiv
As seen in the above Refinitiv chart, Taylor Wimpey’s shares ended at GBX 167.60, up by 1.12 per cent on Thursday.
The company’s market cap stood at £6,045.80 million as of 16 December, while it has given a return to shareholders of 1.95 per cent in last one-year.
- Ocado Group PLC (LON: OCDO)
Ocado Group is one of the major online grocery retail companies in the UK.
The group’s retail revenue, for the 13 weeks to 28 November, rose to £547.8 million, higher by 31.6 per cent for the comparable pre-pandemic period in 2019.
Image source: Refinitiv
As seen in the above Refinitiv chart, Ocado’s shares ended at GBX 1,697.00, up by 3.79 per cent on Thursday. The company’s market cap stood at £ 12,752.73 million as of 16 December.
Related Read: Ocado’s (OCDO) shares surge over 9%: Right time to buy?
