London’s FTSE 100 closed 0.7% higher at 10,724.86 on Tuesday as investors looked past a hotter-than-expected US inflation print and seized on comments from Bank of England Chief Economist Huw Pill casting doubt on market bets that borrowing costs will rise four times over the next year.
Pill, who has voted for rate increases at recent Monetary Policy Committee meetings, told a Citi event on the sidelines of International Monetary Fund meetings in Bangkok that he was “a little bit more sceptical” about whether the Bank needs to follow pricing that implies four consecutive quarter-point hikes. Governor Andrew Bailey and a majority of the MPC held the Bank rate at 3.75% in September while they assessed the inflation impact of the energy shock linked to Middle East conflict.
Gilts and rate-sensitive names
UK government bond yields drifted lower on the session, supporting real estate and utility shares that had sold off when traders were stacking hike bets. The move echoed broader European equity gains as investors reassessed how aggressively central banks would tighten in response to oil back above $100 a barrel.
Among individual movers, self-storage group Big Yellow Group jumped more than 5% after US activist Ancora Holdings disclosed a stake above 4% and urged the board to run a strategic review including a potential sale. Ancora argued the shares trade at a deep discount to net asset value and estimated intrinsic value at £12.36 per share using a 5.1% capitalisation rate — far above the price before the announcement. Big Yellow, a FTSE 250 constituent with more than 100 UK sites, had seen a failed take-private approach from Blackstone in 2025.
Macro cross-currents
US equities fared worse as the S&P 500 fell more than 1% on the inflation data, but London traders treated Pill’s remarks as a local offset. Sterling weakened about 0.5% against the dollar to roughly 1.3193, reflecting both the rate repricing and broader dollar strength.
Miners and banks contributed to the Footsie gain, with commodity names benefiting from elevated Brent while lenders gained on the view that a less aggressive tightening path would limit bad-debt provisioning. The FTSE 250, home to mid-cap domestic earners, also advanced, amplifying the Big Yellow move.
What Pill left on the table
Pill did not declare victory over inflation. He acknowledged the UK faces “a difficult few months” and that the case for a 100-basis-point cumulative increase could strengthen if second-round effects from energy feed into wages and services prices. Bailey separately warned that pressure on broader inflation had been subdued so far but that the longer the shock persists, the harder the fight becomes.
For portfolio managers, the session was a reminder that UK equities still trade as a hybrid macro play — sensitive to US risk appetite, European energy supply and domestic monetary politics all at once. Wednesday brings the August GDP release, which could either validate the growth optimism embedded in recent equity gains or revive recession chatter in the mid-cap index.
Session setup
Futures markets pointed to a steady open on Wednesday as traders awaited the ONS growth figures and further energy headlines from the Strait of Hormuz. Until the MPC votes again, Pill’s scepticism is not policy — but it is the clearest public pushback yet against the hawkish end of the rate path priced into gilts.