Shares in UK banks and home builders rose as traders trimmed their bets on further rate hikes. The central bank held its key rate at 5.25%, ending a series of 14 successive hikes since December 2021, after a surprise drop in August inflation this week.

“Inflation has fallen a lot in recent months and we think it will continue to do so,” BOE Governor Andrew Bailey said in a written statement. “That’s welcome news. But there is no room for complacency. We need to be sure inflation returns to normal and we will continue to take the decisions necessary to do just that.”

Europe’s Stoxx 600 Index was down 1%, but off its lows for the session. US futures indicated more declines on Wall Street. Brent futures dropped for a third day in the longest losing run in almost a month. Treasury 10-year yields increased, while the dollar strengthened.

A day after the Federal Reserve’s meeting, Europe had its own frenetic flurry of central bank decisions. Before the BOE, Swiss National Bank surprised investors by holding interest rates, causing the franc’s steepest drop since May against the euro.

Sweden’s Riksbank increased its key rate as expected and said more hikes were possible, while Norway’s central bank said more tightening may come in December after raising rates to the highest in more than 14 years.

The Fed on Wednesday held its target range, while updated quarterly projections showed most officials favored another rate hike in 2023. Policymakers also see less easing next year, with the median forecast for the federal funds rate at 5.1% by year-end, up from 4.6% when projections were last updated in June.

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