The FTSE 100 has joined European stockmarkets in rallying after the Bank of England and the European Central Bank offered reassurance over the likely path of interest rates.
Thursday’s session came to a close with the FTSE 100 ahead 3.08 per cent, or 191.8 points at 6,421.67, led by Royal Bank of Scotland, Wolseley, Standard Chartered, Rolls-Royce Holdings and GKN.
On the continent the Euro Stoxx 50 gained 2.88 per cent to 2,644.71, while the German Dax and the French Cac 40 both added more than 2 per cent.
The FTSE 100 started the day with gains but surged after the first Bank of England’s monetary policy meeting with Mark Carney as governor surprised the market.
Although no move was made on interest rates and quantitative easing, the Bank suggested it will not lift interest rates in the near future, saying “the implied rise in the expected future path of Bank rate was not warranted by the recent developments in the domestic economy”.
The European Central Bank also provided markets with a boost by issuing what looks like forward guidance on interest rates. ECB president Mario Draghi said the bank will keep interest rates at their historic low for “extended period” and suggested the current 0.5 per cent is not the lowest rates could go to.
This is the first time that the ECB has issued forward guidance on the expected path of interest rates, saying in the past that it never pre-commits on monetary policy.
Sterling and the euro both fell against the dollar after the two central banks made their announcements.