London midday: FTSE edges up ahead of Fed policy announcement
By Michele Maatouk
Date: Wednesday 17 Sep 2025
(Sharecast News) - London stocks had edged higher by midday on Wednesday as investors mulled the latest UK inflation reading and looked ahead to policy announcements from the Federal Reserve and the Bank of England.
The FTSE 100 was 0.2% firmer at 9,203.08.
Russ Mould, investment director at AJ Bell, said: "It's the big day investors have been anticipating all year - the first likely rate cut from the Federal Reserve in 2025. It's a question of how much, not if.
"The market expects a quarter percentage point cut in recognition of a cooling jobs market. That result could help financial markets to keep trucking along, but a half a percentage point cut could spook investors that the Fed has become more concerned about the economic outlook. Whatever the outcome, it's feasible that Donald Trump will say the Fed is still not doing enough to lower the cost of borrowing for consumers and businesses.
"Sticky inflation in the UK strengthens the argument for the Bank of England to sit on its hands tomorrow and leave rates unchanged. Markets aren't expecting a cut at this meeting, nor the one in November. We could feasibly get a cut in December if the labour market cools and the rate of inflation eases back, but equally, the Bank of England is never one to move quickly and rates might not fall below 4% until 2026 is in full flow."
Figures from the Office for National Statistics showed that inflation remained unchanged in August, underpinned by higher food prices.
The consumer prices index was 3.8% in the 12 months to August, unchanged on July and in line with expectations. On a monthly basis, CPI rose by 0.3%, also in line with consensus.
However, the core inflation rate - which strips out the more volatile elements of energy, food, alcohol and tobacco - softened to 3.6% from 3.8%.
Grant Fitzner, chief economist at the ONS, said a number of price movements had offset each other during the month.
He continued: "The cost of airfares was the main downward driver, with prices rising less than a year ago following the large increase in July, linked to the timing of the summer holidays.
"This was offset by a rise in prices at the pump and the cost of hotel accommodation falling less than this time last year.
"Food price inflation climbed for the fifth consecutive month, with small increases seen across a range of vegetables, cheese and fish items."
Food prices soared 5.1% in August, up from 4.9% in July. It was the highest recorded rate since January 2024, although remains well below the peak seen in early 2023.
Including housing costs, inflation rose by 4.1% in the 12 months to August, down from 4.2% a month previously. Month-on-month CPIH rose 0.3%.
In equity markets, Marks & Spencer was the top riser on the FTSE 100 after NielsenIQ data showed that sales at the retailer grew 8.5% in the 12 weeks to 6 September. Broker Shore Capital said this was "a bit ahead of what we would have expected, noting about one-third of Ocado Retail Limited's sales are M&S brand too, not included in this score".
Shore analysts Clive Black and Darren Shirley added: "So, healthy share gains here, helping to support our assertion of the potential for the firm to deliver a robust H2 FY26."
Centrica rallied after Morgan Stanley upgraded shares of the British Gas owner to 'overweight' from 'equalweight' and said it was now its top pick UK utility.
Housebuilder Barratt Redrow gained as it delivered annual profits ahead of forecasts despite completions missing its initial guidance range, helping the company to lift its dividend more than expected. Persimmon and Taylor Wimpey also rose.
Online greeting cards and gift retailer Moonpig surged as it said it was on track to deliver its FY26 guidance as group trading momentum has continued through the start of the year, in line with expectations.
PRS Reit pushed higher as it agreed non-binding heads of terms to sell its main operating subsidiary, which holds its entire property portfolio, to a vehicle backed by Waypoint Asset Management in a deal expected to deliver about £633m in net proceeds to shareholders.
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