Taking markets by surprise, the Bank of England decided to raise its rate by 0.15 points to 0.25%. It thus became the first central bank of a G7 country to take such a monetary tightening measure. The day before, the U.S. Federal Reserve had indicated that it was considering three rate hikes in 2022, while the ECB does not expect to raise rates before 2023.

But after today’s rise, investors seems to have realized they didn’t want monetary policy tightening after all, even though it gives them more clarity about the future. Most markets are in the red this morning: The rise of Omicron in the U.K. and across the globe, and disappointment after Joe Biden was unable to pass a $1.75 trillion spending plan before Christmas, also weighed on investor sentiment. However, the  FTSE 100 inches up 0.2%, partly boosted by fresh data showing British retail sales rose faster than expected last month, helped by Black Friday and early Christmas shopping.

Shares of HSBC fell 0.4% after the U.K.’s financial authorities fined the bank about 64 million pounds for shortcomings in its anti-money laundering processes.

 

Things to read today:

Traders bet Fed will not raise rates as aggressively as forecast (Financial Times)

Europe’s Top Central Banks Take Different Tacks on Inflation (WSJ)