LONDON (Reuters) - The Bank of England on Thursday took another step towards lowering interest rates, as a second official backed a cut and Governor Andrew Bailey said he was "optimistic that things are moving in the right direction".
The BoE said on its Monetary Policy Committee voted 7-2 to keep rates at a 16-year high of 5.25%.
MARKET REACTION:
FOREX:
Sterling rose/fell to $1.2467 from $1.2486 just before the decision and was last down 0.25%. Against the euro, the pound traded at 86.07 pence, compared to 85.96 earlier
BONDS: British government bond yields fell. The interest-rate sensitive two-year gilt yield was last down 2.2 basis points at 4.29%. It had traded at 4.326% earlier.
STOCKS: London's FTSE-100 stock index rallied to a new record high, while the more domestically focussed FTSE 250 pushed into positive territory, having traded lower earlier on.
COMMENTS:
CHRIS SCICLUNA, HEAD OF RESEARCH, DAIWA CAPITAL MARKETS, LONDON:
"It's in line with our expectation given the restrictive nature of market rates in recent months."
"Normally, such an inflation forecast would have triggered a rate cut, but there are concerns about the labour conditions."
"By the time we get to June, they will likely have the confidence to pull the trigger on a rate cut. So, they want to see a bit more data."
"Our base line is for a June rate cut."
(Reporting by the Reuters Markets Team; Compiled by Dhara Ranasinghe; Editing by Amanda Cooper)
