Introduction: BoE’s Bailey says UK inflation cooling faster than expected
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The governor of the Bank of England has declared that UK inflation is cooling more rapidly than expected, as policymakers gather in Washington DC to discuss the state of the global economy.
AndrewBailey told an event organised by the Institute of International Finance event last night that prices were rising slower than he would have expected.
Bailey explained:
“If you’d ask me what inflation was going to be now, it would have been a bit higher than it is today.”
UK inflation hit a three-and-a-half year low of 1.7% in September, below the Bank’s 2% target.
Bailey’s comments appear to be another hint that the Bank of England could lower interest rates at its meeting next month.
This morning, the money markets predict that a November rate cut, from 5% to 4.75%, is an 89% chance.
Those odds jumped at the start of this month, after Bailey told the Guardian that the Bank could become a “bit more aggressive” in cutting interest rates if inflation continues to cool.
Bailey’s told the IIF last night that “disinflation” (an easing in the rate of inflation) was happening faster than expected, saying:
“Disinflation is happening I think faster than we expected it to, but we have still genuine question marks about whether there have been some structural changes in the economy.”
Governor Andrew Bailey at a gathering of top international bankers says “disinflation is happening I think faster than we expected because it to” – further hint of faster rate cuts, says he’d have expected inflation to have been a “bit higher” than it is… pic.twitter.com/LfzN6WFwsO
Bailey is in Washington DC for the annual meetings of the International Monetary Fund (IMF) and the World Bank Group.
UK chancellor RachelReeves has headed there too. Before setting off yesterday, Reeves declared she would be presenting next week’s budget as a economic ‘reset’ for the UK:
“A Britain built on the rock of economic stability is a Britain that is a strong and credible international partner.
“I’ll be in Washington to tell the world that our upcoming budget will be a reset for our economy as we invest in the foundations of future growth.
“It’s from this solid base that we will be able to best represent British interests and show leadership on the major issues like the conflicts in the Middle East and Ukraine.”
The agenda
9am BST: Eurozone composite PMI surveys for October
9.30am BST: UK composite PMI surveys for October
11am BST: CBI’s industrial trends survey of UK manufacturing
1pm BST: IMF chief Kristalina Georgieva gives main press conference
Key events
Barclays bank has beaten profit forecasts this morning, sending its shares 2% higher in early trading.
Barclays grew its pre-tax profits to £2.232bn in the third quarter of the year, up from £1.885bn a year ago, as its investment bank benefitted from corporate dealmaking and trading activity.
CEO C. S.Venkatakrishnan says:
“We continue to be focused on disciplined execution of our three year plan and are encouraged with progress to date. Whilst there is more work to do, the Group is on track to achieve its target of greater than 12% RoTE [Return on Tangible Equity] in 2026.
Hopes that the strike at Boeing might end after five weeks were dashed overnight.
Boeing workers have rejected the latest offer to end the more than a month-long walkout.
The International Association of Machinists andAerospaceWorkers union reported that 64% of 33,000 members voted to reject the latest contract offer
The IAM said negotiations would resume promptly.
The union’s lead contract negotiator JonHolden told reporters:
“This membership has gone through a lot … there are some deep wounds.
“I want to get back to the table. Boeing needs to come to the table as well. Hopefully, we can have some fruitful discussions with the company, and Mr. Ortberg, to try and resolve this.”
Building materials supplier Travis Perkins has cut its profit forecasts for the second time in three months, as sales continue to slide.
TravisPerkins, which owns the DIY retailer Wickes and Toolstation chains, has reported a 5.7% drop in revenues in the last three months, “driven by the Merchanting segment”. That’s worse than the 4.4% drop it reported in the first half of the year.
New CEO PeteRedfern says Travis Perkins has become “distracted and overly internally focused”, and needs to refocus on “operational execution”.
Ful year adjusted operating profit at the Northampton-based firm is now expected to be around £135m, down from the £150m predicted in early August, and the original forecast of £160m-£180m.
Mike Ashley wants to be CEO of Boohoo
Back in the UK, maverick retail chief Mike Ashley has launched a bid to become chief executive of BooHoo.
FraserGroup, which owns around 27% of Boohoo, has presented its founder Ashley as the solution to the “leadership crisis” at the online clothing retailer.
There is a vacancy to fill – last week, Boohoo announced that CEO JohnLyttle was stepping down as it launched a strategic review which could result in the company’s break-up.
Frasers also want to put restructuring expert MikeLennon on the Boohoo board as a director, at an extraordinary general meeting.
It told the City this morning:
The Board appointments proposed by Frasers are now the only way to set a new course for boohoo’s future. Frasers urges boohoo shareholders to vote in favour of its proposals.
Boohoo says it is “in the process of reviewing the content and validity” of Frasers’ request, and urges shareholders to take no action in the meantime….
IMF official warns against global trade war
A senior IMF official has told the BBC that the UK needs more investment, to catch up with G7 rivals.
NEW
IMF top official Gita Gopinath tells BBC when asked about UK fiscal rule change allowing more investment, that “public investment is needed in the UK. If you compare the UK to G7 countries, investment has fallen short” Also stresses “stabilising debt” over 5 years
GitaGopinath, the First Deputy Managing Director of the IMF, also warned that the world economy could contract by the size of the combined French and German economies if a ‘broad based trade war’ broke out, the BBC’sFaisalIslamreports:
Gopinath said:
If you have some very serious decoupling and broad scale use of tariffs, you could end up with a loss to world GDP of close to 7%”.
“These are very large numbers, 7% is basically losing the French and German economies.
NEW: Spoke to top IMF boss Gita Gopinath for BBC News …welcoming relatively soft landing from crisis, performance of US economy which, incredibly, is bigger now than predicted before pandemic, but warnings on debt and on impact of a broad-based trade war https://t.co/hlhr9MkMDJ
Policymakers are worried abour the risk of trade conflicts if Donald Trump wins the US presidential election, as he has talked about introducing a 10% tariff on imports into America.
Reeves to announce major change to fiscal rules releasing £50bn for spending
Larry Elliott
Rachel Reeves will announce at the International Monetary Fund a plan to change Britain’s debt rules that will open the door for the government to spend up to £50bn extra on infrastructure projects.
After weeks of speculation, the chancellor will confirm at the fund’s annual meetings in Washington today that next week’s budget will include a new method for assessing the UK’s debt position – a move that will permit the Treasury to borrow more for long-term capital investment.
The change to the debt rule will be welcomed by the IMF, which says spending on UK infrastructure projects should be ringfenced as the government seeks to repair the damage to the public finances caused by the pandemic and the cost of living crisis.
Reeves will not specify while in Washington which of the various debt measures under consideration has been chosen, but the Guardian has been told by a senior government source that she will target public sector net financial liabilities (PSNFL).
This yardstick – which will replace public sector net debt – will take into account all the government’s financial assets and liabilities, including student loans and equity stakes in private companies, as well as funded pension schemes.
This would give the chancellor room to increase borrowing for investment in long-term infrastructure.
More here:
Introduction: BoE’s Bailey says UK inflation cooling faster than expected
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The governor of the Bank of England has declared that UK inflation is cooling more rapidly than expected, as policymakers gather in Washington DC to discuss the state of the global economy.
AndrewBailey told an event organised by the Institute of International Finance event last night that prices were rising slower than he would have expected.
Bailey explained:
“If you’d ask me what inflation was going to be now, it would have been a bit higher than it is today.”
UK inflation hit a three-and-a-half year low of 1.7% in September, below the Bank’s 2% target.
Bailey’s comments appear to be another hint that the Bank of England could lower interest rates at its meeting next month.
This morning, the money markets predict that a November rate cut, from 5% to 4.75%, is an 89% chance.
Those odds jumped at the start of this month, after Bailey told the Guardian that the Bank could become a “bit more aggressive” in cutting interest rates if inflation continues to cool.
Bailey’s told the IIF last night that “disinflation” (an easing in the rate of inflation) was happening faster than expected, saying:
“Disinflation is happening I think faster than we expected it to, but we have still genuine question marks about whether there have been some structural changes in the economy.”
Governor Andrew Bailey at a gathering of top international bankers says “disinflation is happening I think faster than we expected because it to” – further hint of faster rate cuts, says he’d have expected inflation to have been a “bit higher” than it is… pic.twitter.com/LfzN6WFwsO
Bailey is in Washington DC for the annual meetings of the International Monetary Fund (IMF) and the World Bank Group.
UK chancellor RachelReeves has headed there too. Before setting off yesterday, Reeves declared she would be presenting next week’s budget as a economic ‘reset’ for the UK:
“A Britain built on the rock of economic stability is a Britain that is a strong and credible international partner.
“I’ll be in Washington to tell the world that our upcoming budget will be a reset for our economy as we invest in the foundations of future growth.
“It’s from this solid base that we will be able to best represent British interests and show leadership on the major issues like the conflicts in the Middle East and Ukraine.”
The agenda
9am BST: Eurozone composite PMI surveys for October
9.30am BST: UK composite PMI surveys for October
11am BST: CBI’s industrial trends survey of UK manufacturing
1pm BST: IMF chief Kristalina Georgieva gives main press conference
British businesses reported their slowest growth in 11 months in October and hiring shrank for the first time this year as uncertainty ahead of the Labour gover
The findings of POWWR’s fourth quarterly energy barometer report also revealed that businesses would typically save six per cent by switching energy supp
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