Category Archives: Bank of England

Interest rates need to stay higher for longer, says Bank of England policymaker

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Megan Greene dampens hopes of August cut while underlying causes of inflation remain ‘persistent’

Cuts in UK interest rates should be “a way off”, according to a Bank of England policymaker, who has said that inflationary pressures will keep the cost of borrowing higher than financial markets expect.

Megan Greene, a member of the Bank’s nine-member monetary policy committee (MPC), which sets interest rates, said financial markets were betting “in the wrong direction” when they judged how quickly the central bank would make its first rate cut.

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MP calls Royal Mail delivery cuts a ‘slap in the face for families’ – as it happened

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Live, rolling coverage of business, economics and financial markets as UK postal service says it wants to cut 1,000 jobs and cut delivery days

The question on economists’ lips after the surprise easing of eurozone inflation is: will the European Central Bank (ECB) cut interest rates as early as this month?

The ECB’s rate-setting governing council, led by president Christine Lagarde, meets next week. Economists expect the council to cut rates in June, but surprising data and some doveish comments from some members of the council appear to have put an April cut into play.

While at first sight this looks like it opens up a possible rate cut in April, the ECB is unlikely to act this month. More data on wage growth will come in May, and the ECB needs to be certain of its path. In President Lagarde’s own words: “we will know a little more in April, but we will know a lot more in June”.

Christine Lagarde’s previous indication that the ECB may not commit outright to a path of rate cuts suggests a cautious approach, but the consensus among economists leans towards a potential cut as early as June, pending further data on wage growth trends.

The challenge here for the ECB is that reaching the last mile target inflation rate of 2% may prove more arduous than anticipated, with incremental decreases seen as most likely.

Will the labour market tighten further now that GDP growth looks to be rebounding? We doubt it and, in fact, suspect the unemployment rate will edge up over the coming months.

A still-low unemployment rate doesn’t necessarily mean wage growth will remain at today’s highs, so it need not worry the ECB nor prevent it from starting its easing cycle. We think wage growth will come down, in line with the fall in inflation in recent months as workers’ negotiating power diminishes. A recovery in productivity would support wage growth even as inflation eases. We think productivity growth is now improving, but slowly does it.

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Bitcoin hits new record high above $70,000; US investor ends Currys chase – business live

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Live, rolling coverage of business, economics and financial markets as exchange-traded funds help biggest cryptocurrency rally

The European Commission’s use of Microsoft email and office software broke its own privacy rules, an EU privacy watchdog has ruled.

Microsoft’s software transferred personal data outside the EU, breaching privacy rules, according to the European Data Protection Supervisor.

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Clare Lombardelli named deputy governor of Bank of England

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Ex-Treasury official and adviser to David Cameron will replace Ben Broadbent, making MPC majority female for first time

The Bank of England’s interest-rate-setting committee is set to become majority female for the first time, after the appointment of a former key adviser to David Cameron and George Osborne as one of its deputy governors.

Clare Lombardelli, the chief economist at the Organisation for Economic Co-operation and Development (OECD), will sit on the nine-member monetary policy committee (MPC) when she joins as the Bank’s next deputy governor for monetary policy.

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UK savers should pick accounts beating rising cost of living while they can

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Many best rates are easy access and notice options rather than ones that lock money away

This week’s news that inflation stayed steady at 4% in January means it is still possible to put your money in a savings account with an interest rate that beats the rising cost of living.

Returns on fixed-rate savings accounts have been falling, but, so far, variable rate deals have remained unchanged.

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Bank of England governor dampens hopes of interest rate cut

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Andrew Bailey says cost of living had been higher than expected in December despite ‘encouraging’ inflation news

The Bank of England governor has doused hopes that better-than-expected inflation news last month will accelerate cuts in interest rates, stressing the need for further evidence of wage moderation before Threadneedle Street moves.

Appearing before the House of Lords economics committee on Wednesday, Andrew Bailey said it was “encouraging” that inflation had remained unchanged at 4% in January but the previous month’s figure for the cost of living had been higher than predicted.

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UK pay growth slows less than expected as workers bid up wages

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December figures prompt predictions Bank of England may cut interest rates later than previously expected

Pay growth slowed less than expected in December, prompting predictions the Bank of England could start cutting interest rates later than previously expected.

Earnings growth, excluding bonuses, fell only modestly to 6.2% in October to December 2023 from a revised 6.7% in the previous three months, as workers continued to bid up their wages amid skills shortages and a record number of people with long-term sickness.

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Fujitsu won £1.4bn in new government contracts after court ruling on Post Office software bugs

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MPs find Treasury-affiliated bodies have engaged Horizon firm since damning 2019 high court judgment

The Japanese technology company Fujitsu, whose flawed technology for the Post Office led to the wrongful prosecution of hundreds of subpostmasters, is confirmed to have held contracts worth more than £3.4bn linked to the Treasury since 2019.

Figures published by the Commons’ treasury committee show £1.4bn of contracts were awarded to Treasury-affiliated organisations after a high court ruling in December 2019 over the company’s software. The judgment found that “bugs, errors and defects” in Fujitsu’s Horizon system could cause shortfalls in Post Office branch accounts.

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UK workers must accept lower pay deals to help beat inflation, says Bank ratesetter

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Deputy governor Sarah Breeden also says firms must rein in profits as there is ‘some way to go’ to meet 2% inflation target

Victory in the war on inflation will require British workers to accept lower pay deals and companies to rein in their profits, a senior Bank of England policymaker has said.

Sarah Breeden, one of the central bank’s four deputy governors, said there was still “some way to go” before inflation would fall back to the 2% target set by the government for the Bank to achieve on a sustainable basis.

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UK ditches post-Brexit Canada trade talks; Vodafone and Three UK merger under investigation – as it happened

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Live, rolling coverage of business, economics and financial markets as Canada says UK was unwilling to give access to agricultural products

Shares in US chipmaker Intel have slumped in pre-market trading after it revealed a weaker forecast of earnings.

Chipmakers have been flying in recent years as shortages followed by the huge hype over artificial intelligence – which is hungry for processing power – prompted investors to pile into the sector.

Although Intel beat estimates, investors’ disappointment in Intel’s datacentre GPU story’s growth can be primarily attributed to the slower-than-expected product delivery and ramp-up.

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Fujitsu government contracts under scrutiny in light of Horizon scandal

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Treasury committee writes to 21 bodies including Bank of England and HMRC to demand details of post-2019 deals

Fujitsu’s receipt of lucrative government contracts despite its role in the Post Office Horizon scandal has come under greater scrutiny after the Treasury committee wrote to organisations including the Bank of England and HM Revenue and Customs to demand details of their contracts with the tech company.

The influential group of MPs told 21 public bodies, including the Treasury itself, to provide information on work given to the Japanese-owned company since 2019, when the high court ruled there had been dozens of bugs and errors in its Horizon IT system.

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UK banks expect sharp rise in defaults on unsecured debt

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Lenders forecast biggest quarterly increase in missed repayments on credit cards and loans since 2009

Business live – latest updates

Britain’s biggest high street lenders expect the sharpest rise in defaults on unsecured lending since 2009, according to a Bank of England survey, as households come under growing pressure amid the cost of living crisis.

The figures from Threadneedle Street show banks expect a marked rise in the number of people who fail to meet repayments on credit cards, loans and other forms of unsecured borrowing over the next three months.

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UK economy returns to growth amid Black Friday spending lift

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GDP rises by 0.3% in November after October decline, with car leasing and video games fuelling bounceback

The UK economy returned to growth in November after a recovery in consumer spending driven by Black Friday sales, with shoppers hunting for bargains as the key Christmas shopping season got under way.

Gross domestic product rose by 0.3% on the month, after a decline of 0.3% in October, according to the Office for National Statistics (ONS). City economists had forecast more modest growth of 0.2%.

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UK inflation in unexpectedly steep fall to 3.9% amid lower bread and fuel prices

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Forecast-beating drop in November takes rate to lowest level in more than two years

Britain’s two-year cost of living crisis eased last month as cheaper petrol and less expensive food helped send the annual inflation rate sharply lower to 3.9% – its second big monthly fall in succession.

In a much bigger decline than had been anticipated by economists, the annual rate of price rises fell from 4.6% in October to its lowest level since September 2021.

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Drop in UK inflation is welcome but does not erase two years of pain

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Food prices were 29% higher last month than in September 2021, leaving many households still under pressure

At last, UK inflation has fallen far and fast enough to start to match countries such as France, where the annual rate of price rises has reduced at a faster pace this year.

At 3.9% last month, the headline figure remains almost double the 2% target set for the Bank of England but significantly lower than the 11.1% peak in October last year and below the 5.3% target Rishi Sunak set for the end of 2023.

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Bank of England keeps interest rates on hold as concern about economy grows

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Interest rates will need to stay high for sufficiently long to return inflation to 2% target

The Bank of England has said Britain is facing a tougher job to crush persistently high inflation than other advanced nations, as it kept interest rates on hold at the highest level since the 2008 financial crisis.

Pushing back against expectations in financial markets for a deep round of interest rate cuts next year, the central bank said there was still a long way to go before it could declare victory on inflation, despite a worsening outlook for the UK’s stagnant economy.

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Bank of England, Fed and ECB poised to leave interest rates on hold

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Stubbornly high inflation forces central banks to avoid cuts, but markets expect falls next year

The western world’s largest central banks are poised to keep interest rates on hold this week amid concerns over stubbornly high inflation, despite growing expectations for sharp cuts in borrowing costs next year.

In a crunch week for the global economy, the US Federal Reserve, Bank of England (BoE) and European Central Bank are expected to keep interest rates at their current restrictively high levels to ensure inflation continues to fall back from the highest levels in decades.

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UK employers limit hiring permanent staff amid economic stresses

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Vacancies declining as growth falters, recruiters’ body tells Bank of England

Britain’s largest recruiters have warned the Bank of England that demand for permanent hiring among UK businesses has plunged at the second fastest rate since the pandemic, amid worsening headwinds for the UK economy.

Ahead of the central bank’s decision on interest rates on 14 December, the Recruitment and Employment Confederation (REC) trade body said lingering economic uncertainty and hesitancy to commit to new hires had weighed on activity in November.

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Digital pound should not be considered until risks addressed, MPs warn

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Treasury select committee highlights concerns over data privacy and increased possibility of bank runs

The idea of creating a digital pound should not even be considered until the UK government and Bank of England address concerns over data privacy and the increased risk of bank runs, a parliamentary committee has warned.

MPs on the Treasury select committee said that while it was true that the rollout of a central bank digital currency could trigger fresh innovation and competition in the payments sector, serious questions remained about whether the positive effects outweighed the risks and costs.

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US economy grew faster than expected as businesses invested – business live

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Rolling coverage of business as US revises up GDP growth in third quarter to fastest pace of 2023

At lunchtime in the UK and western Europe markets are fairly flat all around.

The UK’s benchmark FTSE 100 has barely moved, although grocery delivery company Ocado is the top gainer, up 4.8%. (An Ocado director buying shares may have helped.) Trainer retailer JD Sports was the second biggest, up 4.5%.

These allegations are false, not true, incorrect, are not accurate. And it’s an attempt to undermine the work of the COP28 presidency,

I promise you, never ever did I see these talking points that they refer to or that I ever even used such talking points in my discussions.

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