US interest rates have been cut for the third successive time, as the markets price in the Bank of England to follow suit next week.
The Federal Reserve voted for a 0.25% cut as concerns over the sluggish labour market outweigh inflationary pressures.
Not all members were in favour of the cut with two dissenting voters wishing to hold and one preferring to lower rates by 0.5%.
Isaac Stell, investment manager at Wealth Club said: “This dissension in the ranks not only reflects differing outlooks for the economy, but also lays bare the issues any incoming chairman will face in corralling his subordinates around a consensus view.”
Danni Hewson, head of financial analysis at AJ Bell, noted that in the Chancellor’s evidence to the Treasury Select Committee she committed to not levying capital gains tax on primary residences or moving the state pension onto a single lock.
“So it seems the UK’s sacred cows of the state pension and the family home are safe.
“But when combined with promises not to raise income tax, National Insurance or VAT, that still means the chancellor has a scarcity of places to look if she needs to raise taxes to balance the books once again.”
Ahead of the Fed’s announcement, the FTSE 100 ended the session just 0.1% higher at 9,655.53.
Baillie Gifford managed Scottish Mortgage Investment Trust soared to the top of the index following reports that Elon Musk’s SpaceX is pressing ahead with plans for an IPO that could value the group at $1.5trn. The Edinburgh-based trust has an 8.2% holding in SpaceX.
FirstGroup rallied after it was named preferred operator for the London Overground suburban rail network contract by Transport for London.
Aegon was the worst-performing stock for the day, losing over 10% after the insurer said it would move its legal domicile and head office to the US from the Netherlands.
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