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Apr 20, 2018

The Guardian | Bank of England gives mixed signals on rate rise - business live | Business, April 19,2018.

theguardian.com

Bank of England gives mixed signals on rate rise - business live | Business

Angela Monaghan


Hammond remains "Tiggerish" about UK economy

If there is some discrepancy in the Bank of England’s view of the economy - Mark Carney seeing signs of weakness, Michael Saunders less so - then Chancellor Phillip Hammond seems to be on the side of positivity.
Speaking at a lunch at the International Monetary Fund’s spring meeting in Washington, Hammond said he was feeling “Tiggerish” about the UK economy, with debt going down, inflation falling and real wages rising.
This however is not the first time Hammond has channelled Winnie the Pooh’s bouncy tiger. In March’s spring statement he talked up the successes of the economy and said. “I..am at my most positively Tigger-like.”

Scottish Power hikes energy bills for nearly 1m households

Scottish Power has become the third of the “big six” energy suppliers to announce price rises for some of its customers.
British Gas to increase prices for domestic customers by 5.5 per centepa06659771 A file photograph of a flame burning on the hob of a British Gas customer in London, Britain, 17 October 2013. British Gas announced, 10 April 2018 a 5.5 per cent rise in its energy prices. The increase will affect over four million of its customers nationwide. EPA/ANDY RAIN
Photograph: Andy Rain/EPA
Those on the standard variable tariff are facing a 5.5% increase in prices from 1 June.
It means that for about 960,000 customers, the annual dual fuel bill for gas and electricity will rise by £63 to £1,211.
Neil Clitheroe, chief executive of Scottish Power Retail, said:
Unfortunately our standard variable prices are increasing. This reflects rising wholesale energy costs and compulsory non-energy costs. Two-thirds of our customers are unaffected.
We will be contacting all customers affected by the price change to give them the opportunity to move to a fixed price tariff alternative and avoid this increase.
It follows similar moves by British Gas and EDF.

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President Trump slams Opec over 'artificially high' oil price

Donald Trump has criticised Opec over “artificially high” oil prices:
Donald J. Trump (@realDonaldTrump)
Looks like OPEC is at it again. With record amounts of Oil all over the place, including the fully loaded ships at sea, Oil prices are artificially Very High! No good and will not be accepted!
April 20, 2018
Brent crude is currently down 0.3% at $73.57 a barrel, after rising in earlier trading.
Updated

Will the remaining seven members of the Bank’s Monetary Policy Committee vote with the governor, Mark Carney, or Michael Saunders, at the May policy meeting?
That is the key question according to Craig Erlam, analyst at currency specialist Oanda, based on the assumption that Carney will vote to leave rates unchanged at 0.5% and Saunders will vote for a hike to 0.75%. Erlam says:
While a hike is by no means off the table, the comments from Carney are a clear and deliberate warning to markets that the Monetary Policy Committee could delay the move by a few months, at which point the data may be less sketchy and the outlook more clear. Market expectations have since fallen to around 45% for a rate hike and could fall further if fellow policy makers join Carney is playing down an increase in a few weeks.
One policy maker that won’t be joining him is Michael Saunders, who spoke this morning about the need to raise interest rates at a “gradual” not “glacial” pace and questioned the significance of first quarter data due to the weather.
He also claimed labour market inflation pressures are greater than forecast in February so I wouldn’t expect his vote to change next month. The question is what camp the other policy makers sit in, Carney’s or Saunders’.
Updated

Pound trims losses after Saunders' speech

pound coins
Investors appear to be placing their bets back on a May rate hike after a typically hawkish speech from Michael Saunders.
Having fallen fairly sharply against the dollar this morning - following Mark Carney’s interview with the BBC - the pound is better shape now.
It is down 0.1% against the dollar, at $1.4075, and up 0.3% against the euro at €1.1442.

Saunders’ takes a different view to Mark Carney, governor of the Bank of England.
Carney said on Thursday night that some of the recent data, such as retail sales, had been softer, and pointed to the fact that inflation has fallen faster than the Bank was predicting in February.
He also suggested that policymakers were aware they could vote for the next hike in rates at any MPC meeting, and were not tied to making such a decision in May.
Andrew Sentance, former members of the MPC, agrees with Saunders:
Andrew Sentance (@asentance)
Sensible comments here from Michael Saunders. Hopefully his fellow #MPC members will take note. https://t.co/S3crD8ALbZ
April 20, 2018

The Bank of England’s Michael Saunders says that “gradual” rate rises does not mean just one per year:
‘Gradual’ does not imply that the MPC can only raise rates at a very low frequency, such as once per year. Nor does “gradual” mean that the MPC cannot tighten faster than markets price in.
He does however say that the Bank does not intend to give signals about the precise timing of a rate rise:
‘Gradual’ does not necessarily mean that the exact timing of rate changes must be totally predictable or signalled in advance.
The MPC does not intend to create unnecessary uncertainty, and gives guidance – based on our economic forecasts – on the expected general outlook for interest rates.
But I doubt that we will regularly use code words to effectively pre-announce policy decisions from meeting to meeting.

BoE's Saunders: economy no longer needs huge stimulus

Michael Saunders
Michael Saunders
Michael Saunders, a member of the Bank of England’s Monetary Policy Committee, will be sticking with his vote to raise UK rates in May, his comments in Glasgow suggest.
Speaking at the University of Strathclyde, Saunders said the economy no longer needed as much stimulus from the Bank and rises should be gradual but not glacial.
Saunders voted for a 0.25 point rise in rates to 0.75% at the MPC’s last meeting in March, but was outvoted by colleagues.
Speaking this morning, he said:
With spare capacity largely used up and cost pressures rising, I believe the economy no longer needs as much stimulus as previously. Rather, we probably need to move over time to something more like neutral, in order to ensure a sustainable return of inflation to target.
The second topic is to explain why – at least from my perspective – any further tightening is likely to be at a gradual pace and to a limited extent. A key point is that “gradual” need not mean “glacial”.
Updated

Michael Saunders, a member of the Bank of England’s Monetary Policy Committee, is giving a speech in Glasgow this morning.
His comments will be scrutinised by investors and economists hoping for further clues about the likelihood (or not) of a May rate rise.
Saunders is one of the MPC’s most hawkish members - tending to favour tighter monetary policy - and was one of two of the nine-strong committee to vote for a hike in March. The other was Ian McCafferty.
We’ll bring you the highlights of the speech after 10.30am

Economists at the Bank of America say they are sticking with the assumption that UK rates will rise in May, for now at least:
Until last night we assumed the weak data flow would not derail a May hike. There were no signs of cold feet at the Bank of England after a hawkish March policy meeting and rate setter Jan Vlieghe arguing for six hikes in the next three years.
Then last night Governor Mark Carney suggested delay. In a BBC interview he said the BoE was conscious of “other meetings over the course of the year” when they could hike.
As hints go, we think it’s as strong as we get. The data justify delay in our view. We have been sceptical of the need for a May hike. We stick with a May hike for now, waiting to see if other rate setters speak. But the 85% market probability on a May hike looks (much) too high now.

UK bond prices rise after Carney dampens rate hike expectations

British government bond prices are rising this morning, as investors are less convinced that interest rates will rise in May.
Mark Carney, governor of the Bank of England, suggested markets might have got carried away by assuming a hike would come next month.
The yield on benchmark 10-year bonds fell four basis points to 1.49% (where a lower yield reflects a higher price).
Five-year bond yields were down five basis points at 1.18%.

Moya Greene, Royal Mail chief executive
Moya Greene
Moya Greene’s departure from Royal Mail will leave the FTSE 100 with just six female chief executives, at a time when the government is pushing for greater boardroom diversity.
Commenting on her departure - after the company announced she will step down as chief executive in June and retire in September - Greene said:
It has been my pleasure and a great privilege to serve as chief executive of this cherished UK institution. I am proud of what we have achieved over the last eight years. It is very pleasing to note that around 20% of this company is owned by our employees and retail shareholders.
Most of all, I am honoured to have worked alongside Royal Mail’s people and the union leadership. It is their hard work and dedication that connects households, communities and companies across the UK every day.
Updated

Royal Mail boss Moya Greene to retire

Royal Mail has announced that Moya Greene will step down as chief executive in June, after more than eight years in the job.
FILE PHOTO: Royal Mail vans are parked in the Leytonstone post office depot in London, Britain early July 6, 2017. REUTERS/Russell Boyce/File Photo
The Canadian oversaw the privatisation of Royal Mail in 2013 and has “transformed” the business according to chairman Peter Long.
Greene will be replaced by Rico Back, chief executive of Royal Mail’s European subsidiary, General Logistics Systems.
Announcing the changes, Long said:
Royal Mail was highly fortunate to recruit Moya, given her direct experience, strategic vision, drive and proven track record across a range of industry sectors.
When Moya joined in the summer of 2010, the company was balance sheet insolvent. Since then, Royal Mail has been transformed, including our privatisation in 2013 and two significant, ground-breaking agreements with the CWU [Communication Workers Union].
Alongside the strong financial position Moya has secured for the company, we have invested over £1.5 billion in our UK operation in recent years. We are one of the most favourably viewed brands in the UK. I would like to extend to Moya our sincere thanks for her tremendous contribution during a defining time for us.

Mark Carney as 'unreliable boyfriend makes a comeback'

After a short break, the unreliable boyfriend is back according to Michael Hewson, chief market analyst at CMC Markets.
Mark Carney may well rue the day back in 2014 that MP Pat McFadden accused the Bank of behaving like an “unreliable boyfriend” by giving mixed messages on the likely timing of an interest rate rise.
Fast forward to 2018 and markets are once again confused by the Bank’s signals after Carney suggested last night policymakers might not raise rates in May as widely expected.
Hewson says:
Sterling traders could be forgiven for experiencing a significant case of déjà vu in the wake of yesterday’s remarks, as this isn’t the first time the Bank of England has led markets up the garden path, they did it in 2014, with the Bank of England governor earning the unfortunate moniker of the “unreliable boyfriend” from a UK MP for his flip flopping on whether to raise interest rates.
It would appear that after a short break he’s back.
Updated

FTSE boosted by weaker pound

The UK’s FTSE 100 is outperforming its major European peers this morning as it benefits from a weaker pound.
  • FTSE 100: +0.5% at 7,364
  • Germany’s DAX: -0.1% at 12,556
  • France’s CAC: +0.1% at 5,399
  • Italy’s FTSE MIB: -0.2% at 23,740
  • Spain’s IBEX: flat at 9,868
  • Europe’s STOXX 600: -0.2% at 381

Barclays boss has 'unanimous' support of the board

The Barclays board is giving its full support to chief executive Jes Staley this morning, despite regulators concluding that he breached conduct by trying to discover the identity of a whisteblower.
From the Barclays statement:
The Barclays board continues to have unanimous confidence in Mr Staley and continues to recommend his re- election as a director at the Barclays annual general meeting on 1 May 2018.
As set out in the April 2017 announcement, the Barclays board will determine what adjustment to Mr Staley’s compensation is appropriate once the FCA and PRA processes have concluded.
Bloomberg (@business)
Barclays CEO Jes Staley will keep his job, after regulators conclude whistle-blower investigation https://t.co/4RHbPWkwoR pic.twitter.com/0I0X50lEEB
April 20, 2018

Barclays boss to be fined over whistleblowing scandal

Jes Staley
Jes Staley Photograph: Peter Nicholls/Reuters
Barclays’ chief executive Jes Staley is to be fined by UK regulators over his attempt to uncover the identity of a whistleblower in 2016, the bank revealed this morning.
It is not yet clear how much Staley will be fined by the Financial Conduct Authority and the Prudential Regulation Authority, which have so far issued the boss with “draft warning notices”.
The regulators have stopped short of saying that Staley is not fit or proper to run the bank.
It follows Staley’s admission that he had tried to unmask a whistleblower who made allegations about a long-term associate he had brought to the bank.
Staley twice attempted to use Barclay’s internal security team to track down the authors of two anonymous letters sent to the board and a senior executive at the bank in June 2016.
Here is an extract from the statement from Barclays this morning:
In respect of Mr Staley, the FCA and PRA have recently issued confidential draft warning notices setting out their reasons for proposing enforcement actions.
The FCA and PRA are alleging that Mr Staley’s actions in relation to this matter represented a breach of Individual Conduct Rule 2 (requirement to act with due skill, care and diligence) and each have proposed that he pay a financial penalty.
The FCA and PRA are not alleging that he acted with a lack of integrity or that he lacks fitness and propriety to continue to perform his role as group chief executive officer.
Updated

The agenda: pound falls as Carney dampens May rate rise expectations

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
The pound is down this morning after Bank of England governor Mark Carney hinted that market expectations that interest rates would rise in May were overblown.
Investors closely monitoring the recent voting patterns and comments made by the Bank’s policymakers had decided there was a 90% chance that rates will rise from 0.5% to 0.75% at the next meeting of the Bank’s rate-setting Monetary Policy Committee on 10 May.
However, Carney told the BBC last night that the MPC were not fixed on a particular month for raising rates and pointed to some softer UK data, such as retail sales.
Here’s what he had to say:
Prepare for a few interest rate rises over the next few years,” he told me.
I don’t want to get too focused on the precise timing, it is more about the general path.
We have had some mixed data. On the softer side some of the business surveys have come off. Retail sales have been a bit softer - we are all aware of the squeeze that is going on in the high street.
We’ll sit down calmly and look at it all in the round. I am sure there will be some differences of view but it is a view we will take in early May, conscious that there are other meetings over the course of this year.
The pound is down 0.2% against the dollar at $1.4058, and down 0.2% against the euro at €1.1388.
In other breaking news this morning Barclays boss Jes Staley is to be fined by UK regulators after he attempted to uncover the identity of a whistleblower. More on that soon.