UK stock indexes drop ahead of BoE rate decisions

The blue-chip FTSE 100 closed the session down 0.2%, while the FTSE 250 index slipped 0.7%

The main UK stock indexes slid on Monday as investors geared up for interest rate decision from the Bank of England.

The blue-chip FTSE 100 closed the session down 0.2%, having traded in a tight range over the past few days. The FTSE 250 index slipped 0.7%.

British housing stocks were among the worst hit on the day, driving their own FTSE 350 index more than 3% lower. Shares of Barratt Redrow dropped 2% after Citigroup cut the housebuilder’s target price to 506 pence from 530 pence.

Unilever slipped 2% after Magnum Ice Cream Company started Amsterdam trading as it finalised a long-awaited spinoff from the global packaged goods maker.

Meanwhile in the U.S., investors are awaiting the central bank’s monetary policy decision on Wednesday, at a time when policymakers remain divided on whether further rate cuts are needed to help the job market or too risky due to elevated inflation.

Traders are pricing in a 90% chance of a 25-bps rate cut this week, according to CME Group’s Fedwatch tool, with the odds of such a move recently boosted by mixed U.S. economic data and comments from central bank officials.

The boss of the UK arm of German discounter Aldi said Britons feeling the pinch are spreading the cost of Christmas by shopping earlier and swapping festive meals out for dining in.

The BoE is widely expected to lower borrowing costs by 25 basis points to 3.75% next week, after keeping them on hold in November.

Shares in investment firm SDCL Efficiency Income Trust plunged 16.2% as a key metric – the ratio of debt to equity – stood at 71.9% of NAV, breaching the investment policy limit at 65%.