UK’s main FTSE 100 stock index dropped 1% and revisited its near one-month low on Thursday, as the US Federal Reserve’s overnight projection of a slower path of interest-rate cuts knocked down investors’ risk appetite globally.

The FTSE 100 was down 1% as of 0900 GMT, hitting its lowest since Nov. 21, levels touched just two days back, echoing the rout across European and Asian stocks on the day and Wall Street’s slide in the prior session.

The domestically focussed FTSE midcap 250 was also down 1%.

The Fed’s fresh projections called for two 25-basis-point rate cuts next year amid rising inflation right ahead of Donald Trump’s second stint at the White House next month.

Policymakers, who see slightly stronger economic growth and lower unemployment next year, indicated concerns over inflation likely re-igniting that could keep rates higher for longer.

A stronger sterling and a spike in British gilt yields also kept UK equities under pressure.

Investors were also on tenterhooks ahead of a local monetary policy decision at 1200 GMT (7:00 a.m. ET), where the Bank of England is expected to keep rates unchanged.

Any hints on the future course of policy, especially after this week’s strong wages data, will be at the top of the watch list.

UK stocks fall after surprise contraction in Oct GDP

Homebuilders took a sharp hit on fears of a slower-than-expected pace of rate cuts, down 1.6%.

In an overall market decline, lenders and investment banking sub-indexes also lost over 1% each.

In a rare bright spot, shares of water utility firms rose after water regulator Ofwat allowed bills to rise by 36% in the next five years.

Severn Trent and United Utilities were up over 1% each. Meanwhile, Serco Group was at the top of the only few gainers on the FTSE 250 index, up 7%, following the outsourcing company’s 2024 trading statement and 2025 outlook.