FTSE 100 up after BoE survey shows slower price plans

The FTSE 100 was up 0.45% at 12:48 pm GMT on Friday, while the mid-cap FTSE 250 was largely unchanged. The movement followed publication of a Bank of England survey of more than 2,000 companies.

The survey found 57% of firms expect to raise prices in the coming year in response to the recent energy price shock, seven percentage points lower than in April.

Technology stocks led gains, rising about 2.1%, and personal care shares advanced roughly 1.7%. Precious metal mining stocks underperformed, falling about 2.2%.

Market participants adjusted interest-rate expectations after the survey. Traders currently expect the Bank of England to hold its policy rate at 3.75% at the next meeting, while still pricing one or possibly two quarter-point increases later in the year.

Paul Dales, chief UK economist at Capital Economics, commented: ‘The latest evidence appears to support our view that the weakness of the labour market will prevent the second-round inflation effects that the Bank of England fears.’ He added: ‘If so, the Bank of England might stand out from the central bank crowd by not raising interest rates.’

Investors continued to monitor developments in the Middle East. Market participants noted that an early resolution of the conflict and the reopening of the Strait of Hormuz would help limit further economic fallout. Iran has reaffirmed support for Hezbollah and called for Israeli withdrawal from southern Lebanon.

Domestic politics also featured in market attention. Labour Mayor Andy Burnham stated earlier this week that he would enter any leadership contest against Prime Minister Keir Starmer if he wins an upcoming local election.

Traders and portfolio managers reported they were weighing the survey results alongside geopolitical developments and upcoming economic data. Investors will watch upcoming reports on wages and employment for signs of labour market strength and any impact on inflation and policy.