06.02.25 - BoE lowers key rate

Bank of England (BoE) restarts the monetary easing, reducing the key rate by 25bps as expected and signaled further rate cuts to come this year as it downgraded the UK’s growth outlook for 2025. The key interest rate is now at 4.5%.

Markets: London’s stock index FTSE 100 index jumped more than 1% while interest rates decreased and British pound lost some ground.

My View: Lower interest rates are working in my favor with my tactical position in long-term Gilts via an ETF, purchased on January 14th when inflation fears were at their peak. The position has gained over 15% since then. With the potential for rates to decline further, I am maintaining both this position and my tactical allocation in GBP, which was implemented at the same time and is showing a modest gain. Meanwhile, most of my UK single-stock investments are also experiencing a strong upward move today. In the event of a potential trade war between the US and Europe, the UK could emerge as a beneficiary.

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