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London Markets: IMF warns Bank of England against ‘inaction’ on interest rates

Two days ahead of a Bank of England meeting, the International Monetary Fund on Tuesday called on the central bank to withdraw its exceptional support for the economy, though it left open the question as to timing.

The IMF call came as part of the preliminary findings of its staff at the end of a periodic official visit. The so-called Article IV mission said economic growth will remain strong in the near term, but so will price pressures. It’s estimating 5% growth next year, and inflation peaking at 5.5% in the spring.

The IMF said early action by the Bank of England could slow the recovery, but inaction could allow the second-round effects of inflation to proliferate.

The Bank of England on Thursday is widely seen postponing an interest-rate hike until February, giving it more time to assess the impact of the omicron variant of coronavirus. The Bank of England in November surprised markets by not increasing interest rates from the current 0.1% level.

Meanwhile, the FTSE 100

rose 0.4% in midday trade to 7259.77.

Ocado Group

shares jumped 9%, after winning an intellectual property case in the U.S. against AutoStore

over robotics technology used in distribution centers. Separately, Ocado’s U.K. venture with Marks & Spencer

reported a 3.9% decline in revenue in the Nov. 28-ending quarter, and forecast mid-teens sales growth next year, driven by rollout of new capacity. Ocado said it was just speculation that M&S would increase its 50% stake in the venture.

Rentokil Initial

shares stumbled 8% after agreeing to buy U.S. rival Terminix

in a $7 billion cash-and-stock deal.


shares dropped 5% after Altice Group owner Patrick Drahi disclosed he increased his stake to 18% from 12.1%. He stated he doesn’t intend to make an offer, which means he can’t do so for another six months unless another company launches an offer, or the BT board recommends it.

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