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| Mark Carney: Bank of England will tolerate higher inflation – as it happened | |
| (35 minutes later) | |
| 3.22pm BST | |
| 15:22 | |
| Closing summary | |
| Before we close the blog for the day, here is a summary of the main events. Predictably it’s been Brexit focused. | |
| A final point: Traders have been offloading government bonds today following Carney’s inflation comments and fears of a hard Brexit. | |
| The yield on benchmark 10-year bonds climbed to 1.14%, up from just 0.97% a week ago. | |
| On that note we’ll close up. Thank you for reading the blog and for all the comments. You can follow all the latest breaking Guardian business stories here. Have a great weekend and please join us again on Monday. AM | |
| 2.57pm BST | 2.57pm BST |
| 14:57 | 14:57 |
| US markets open higher | US markets open higher |
| Wall Street has opened higher, with better-than-expected results from Citigroup and JP Morgan lifting financial stocks. | Wall Street has opened higher, with better-than-expected results from Citigroup and JP Morgan lifting financial stocks. |
| 2.52pm BST | 2.52pm BST |
| 14:52 | 14:52 |
| Helena Smith | Helena Smith |
| Over in Greece today a conversation that allegedly took place at the height of the euro debt crisis between prime minister Alexis Tsipras and Russian president Vladimir Putin is causing ructions. | Over in Greece today a conversation that allegedly took place at the height of the euro debt crisis between prime minister Alexis Tsipras and Russian president Vladimir Putin is causing ructions. |
| Did he or didn’t he? That is the question on the lips of many today as the fallout from revelations of a book about French president Francois Hollande reverberate in Athens. In the tome, entitled “A president shouldn’t say that,” the French head of state is cited as saying Putin had confided that in the summer of 2015, Tsipras asked him if Russia would consider printing drachma in the event of Athens being ejected from the eurozone. | Did he or didn’t he? That is the question on the lips of many today as the fallout from revelations of a book about French president Francois Hollande reverberate in Athens. In the tome, entitled “A president shouldn’t say that,” the French head of state is cited as saying Putin had confided that in the summer of 2015, Tsipras asked him if Russia would consider printing drachma in the event of Athens being ejected from the eurozone. |
| Putin is claimed to have said: “Greece has asked us to print drachma in Russia since it no longer has a printing press to do it. I wanted to tell you so you understand that we don’t want something like that.” | Putin is claimed to have said: “Greece has asked us to print drachma in Russia since it no longer has a printing press to do it. I wanted to tell you so you understand that we don’t want something like that.” |
| But did Tsipras actually ever utter such words? Sources close to him swear not – even if it is now well known that his request for a €10bn loan from Russia was refused at the time. Earlier today, the deputy defense minister Dimitris Vitsas, a close confidant, fiercely denied the claim calling in “nonsense.” | But did Tsipras actually ever utter such words? Sources close to him swear not – even if it is now well known that his request for a €10bn loan from Russia was refused at the time. Earlier today, the deputy defense minister Dimitris Vitsas, a close confidant, fiercely denied the claim calling in “nonsense.” |
| Officials in Moscow have also rejected the allegation. | Officials in Moscow have also rejected the allegation. |
| With Tsipras and his Syriza party now enthusiastically embracing the eurozone – despite the immense price Athens is now paying in terms of bailout-induced austerity - the spat is overshadowing a much-anticipated congress of his once radical left Syriza party. | With Tsipras and his Syriza party now enthusiastically embracing the eurozone – despite the immense price Athens is now paying in terms of bailout-induced austerity - the spat is overshadowing a much-anticipated congress of his once radical left Syriza party. |
| In a speech opening the three day- event last night, Tsipras insisted that leaving the euro would have destroyed Greece and was not an alternative the progressive left could ever have adopted. | In a speech opening the three day- event last night, Tsipras insisted that leaving the euro would have destroyed Greece and was not an alternative the progressive left could ever have adopted. |
| 2.42pm BST | 2.42pm BST |
| 14:42 | 14:42 |
| Theresa May holds Brexit meeting with Nissan boss | Theresa May holds Brexit meeting with Nissan boss |
| The Prime Minister has met the chief executive of Nissan, Carlos Ghosn, to discuss the impact of Brexit. | The Prime Minister has met the chief executive of Nissan, Carlos Ghosn, to discuss the impact of Brexit. |
| It follows a warning from the Japanese car maker that it could pull further investment at its Sunderland plant unless the UK government guaranteed compensation for any Brexit-related tariffs it might face in the future. | It follows a warning from the Japanese car maker that it could pull further investment at its Sunderland plant unless the UK government guaranteed compensation for any Brexit-related tariffs it might face in the future. |
| A Nissan spokesman said: | A Nissan spokesman said: |
| The purpose of this meeting between Mr Ghosn and Mrs May is to ensure both Nissan and the UK government have an aligned way forward that meets the needs of both the company and the country. | The purpose of this meeting between Mr Ghosn and Mrs May is to ensure both Nissan and the UK government have an aligned way forward that meets the needs of both the company and the country. |
| We do not expect any specific agreement to be communicated followin g this initial introductory meeting of the chief executive and the prime minister. | We do not expect any specific agreement to be communicated followin g this initial introductory meeting of the chief executive and the prime minister. |
| 2.30pm BST | 2.30pm BST |
| 14:30 | 14:30 |
| Chris Williamson at IHS Markit, says the headline rebound in US retail sales in September masks a weaker picture for “core” sales, which strip out food, fuel and cars. | Chris Williamson at IHS Markit, says the headline rebound in US retail sales in September masks a weaker picture for “core” sales, which strip out food, fuel and cars. |
| While the September upturn is good news, take a step backwards and it’s clear that the picture is not so bright. The September upturn leaves total sales 0.7% higher in the third quarter, less than half of the 1.5% expansion seen in the second quarter. | While the September upturn is good news, take a step backwards and it’s clear that the picture is not so bright. The September upturn leaves total sales 0.7% higher in the third quarter, less than half of the 1.5% expansion seen in the second quarter. |
| The data on core sales are even more worrying. Over the third quarter as a whole, core sales were up a mere 0.1% (or 0.4% annualised), which is the worst performance since the second quarter of 2013. | The data on core sales are even more worrying. Over the third quarter as a whole, core sales were up a mere 0.1% (or 0.4% annualised), which is the worst performance since the second quarter of 2013. |
| It’s core sales which tend to be a better guide to wider measures of consumer spending, so this weakening trend is a big concern and will likely lead to some downward revisions to third quarter GDP forecasts. | It’s core sales which tend to be a better guide to wider measures of consumer spending, so this weakening trend is a big concern and will likely lead to some downward revisions to third quarter GDP forecasts. |
| US core retail sales up just 0.1% in Q3 v Q2 = worst performance since 2013 Q2 and one of worst this side of global financial crisis pic.twitter.com/VHj6sfzcHR | US core retail sales up just 0.1% in Q3 v Q2 = worst performance since 2013 Q2 and one of worst this side of global financial crisis pic.twitter.com/VHj6sfzcHR |
| 2.01pm BST | 2.01pm BST |
| 14:01 | 14:01 |
| US retail sales rebound in September | US retail sales rebound in September |
| Retail sales in the US rose by 0.6% in September, following a 0.2% drop in August. | Retail sales in the US rose by 0.6% in September, following a 0.2% drop in August. |
| The increase was in line with economists’ expectations, and will support expectations that the Fed could raise rates in December. | The increase was in line with economists’ expectations, and will support expectations that the Fed could raise rates in December. |
| US data for factory gate inflation also suggested price pressures are starting to build, which is likely to further fuel expectations of a hike. | US data for factory gate inflation also suggested price pressures are starting to build, which is likely to further fuel expectations of a hike. |
| James Knightley, senior economist for the UK and US at ING: | James Knightley, senior economist for the UK and US at ING: |
| Overall, the reasonably firm retail sales number and slightly higher inflation data support the idea of a Federal Reserve rate hike in December – Fed funds futures currently pricing a 66.7% probability of this happening. | Overall, the reasonably firm retail sales number and slightly higher inflation data support the idea of a Federal Reserve rate hike in December – Fed funds futures currently pricing a 66.7% probability of this happening. |
| The only things that can really stop momentum building for such a move would be a market unfriendly election outcome and softness in the two payrolls reports between now and the December Fed meeting. | The only things that can really stop momentum building for such a move would be a market unfriendly election outcome and softness in the two payrolls reports between now and the December Fed meeting. |
| 1.43pm BST | 1.43pm BST |
| 13:43 | 13:43 |
| European new car sales rose 7.2% in September, figures published earlier showed. | European new car sales rose 7.2% in September, figures published earlier showed. |
| It was slower than the 9.8% growth in the same month last year, held back by weaker sales in the UK. | It was slower than the 9.8% growth in the same month last year, held back by weaker sales in the UK. |
| A total of 1.45m new cars were registered last month according to European Automobile Manufacturers Association (ACEA), the highest September total on record. | A total of 1.45m new cars were registered last month according to European Automobile Manufacturers Association (ACEA), the highest September total on record. |
| Sales in Italy were up 17.4% over the month at the top end of the table, but rose by just 1.6% in the UK. | Sales in Italy were up 17.4% over the month at the top end of the table, but rose by just 1.6% in the UK. |
| Carlos DaSilva at IHS Markit said there was no sign of a Brexit impact in the data. | Carlos DaSilva at IHS Markit said there was no sign of a Brexit impact in the data. |
| After a bumpy ride through the summer months, with a disappointing July followed by a surprisingly strong August, the European passenger car market came back to a more normal pattern in September − one of solid but not outstanding growth. | After a bumpy ride through the summer months, with a disappointing July followed by a surprisingly strong August, the European passenger car market came back to a more normal pattern in September − one of solid but not outstanding growth. |
| By and large, September was broadly in line with expectations with still no evidence of any impact from the UK’s vote to leave the European Union. | By and large, September was broadly in line with expectations with still no evidence of any impact from the UK’s vote to leave the European Union. |
| 12.47pm BST | 12.47pm BST |
| 12:47 | 12:47 |
| PM's spokeswoman brushes off Tusk's Brexit comments | PM's spokeswoman brushes off Tusk's Brexit comments |
| Britain is committed to leaving the European Union, a spokeswoman for Theresa May said, brushing off a suggestion by the European Council President Donald Tusk that the country might change its mind. | Britain is committed to leaving the European Union, a spokeswoman for Theresa May said, brushing off a suggestion by the European Council President Donald Tusk that the country might change its mind. |
| Tusk said on Thursday that Britain was facing a choice between hard Brexit, or no Brexit. | Tusk said on Thursday that Britain was facing a choice between hard Brexit, or no Brexit. |
| She said: | She said: |
| The Prime Minister has been very clear ... that the British people have made their decision and we are now going to get on with that, with taking the UK out of the EU and on making the most of the opportunities ahead. | The Prime Minister has been very clear ... that the British people have made their decision and we are now going to get on with that, with taking the UK out of the EU and on making the most of the opportunities ahead. |
| The spokeswoman pointed out that Tusk had also said Brexit talks should be approached in good faith: | The spokeswoman pointed out that Tusk had also said Brexit talks should be approached in good faith: |
| That is the sort of spirit the Prime Minister wants to encourage and foster with other European partners, that we approach this constructively. | That is the sort of spirit the Prime Minister wants to encourage and foster with other European partners, that we approach this constructively. |
| There are opportunities both for the UK and for the EU with the decision to leave and so we now need to come together, work together effectively to agree on a new arrangement, a new relationship that can work in the interests of all of us. | There are opportunities both for the UK and for the EU with the decision to leave and so we now need to come together, work together effectively to agree on a new arrangement, a new relationship that can work in the interests of all of us. |
| Updated | Updated |
| at 12.49pm BST | at 12.49pm BST |
| 12.18pm BST | 12.18pm BST |
| 12:18 | 12:18 |
| Weak UK construction data for August shows that the government needs to invest more in infrastructure, according to the TUC. | Weak UK construction data for August shows that the government needs to invest more in infrastructure, according to the TUC. |
| Frances O’Grady, the TUC general secretary, says: | Frances O’Grady, the TUC general secretary, says: |
| Today’s construction figures are a timely reminder for the chancellor. We are not building enough homes, roads and railways. | Today’s construction figures are a timely reminder for the chancellor. We are not building enough homes, roads and railways. |
| Philip Hammond must use next month’s autumn statement to green light investment in housebuilding, high-speed rail and a new runway at Heathrow. | Philip Hammond must use next month’s autumn statement to green light investment in housebuilding, high-speed rail and a new runway at Heathrow. |
| With investors twitchy after Brexit, the government needs to step up. | With investors twitchy after Brexit, the government needs to step up. |
| Updated | Updated |
| at 12.30pm BST | at 12.30pm BST |
| 11.38am BST | 11.38am BST |
| 11:38 | 11:38 |
| Mark Carney: Bank of England will tolerate inflation overshoot | Mark Carney: Bank of England will tolerate inflation overshoot |
| Mark Carney has said he is willing to tolerate an overshoot of the Bank of England’s 2% inflation target. | Mark Carney has said he is willing to tolerate an overshoot of the Bank of England’s 2% inflation target. |
| The governor’s comments suggest that the Bank’s policymakers will focus on supporting economic growth through low interest rates following the Brexit vote, rather than acting to bring inflation down. | The governor’s comments suggest that the Bank’s policymakers will focus on supporting economic growth through low interest rates following the Brexit vote, rather than acting to bring inflation down. |
| Speaking at an event in Nottingham, Carney said: | Speaking at an event in Nottingham, Carney said: |
| Our judgment in the summer was that we could have seen another 400,000-500,000 people unemployed over the course of the next few years. So we’re willing to tolerate a bit of overshoot in inflation over the course of the next few years in order to avoid that situation, to cushion the blow. | Our judgment in the summer was that we could have seen another 400,000-500,000 people unemployed over the course of the next few years. So we’re willing to tolerate a bit of overshoot in inflation over the course of the next few years in order to avoid that situation, to cushion the blow. |
| UK inflation was 0.6% in August, well below the 2% target. But the Bank and other commentators have warned that inflation will soon start to rise, as the sharp fall in the pound since the Brexit vote starts to feed through to higher import prices. | UK inflation was 0.6% in August, well below the 2% target. But the Bank and other commentators have warned that inflation will soon start to rise, as the sharp fall in the pound since the Brexit vote starts to feed through to higher import prices. |
| Carney also conceded that it’s “going to get difficult” for people on lower incomes as prices start to rise at a faster pace. | Carney also conceded that it’s “going to get difficult” for people on lower incomes as prices start to rise at a faster pace. |
| Carney says inflation is going to rise. Food first, goods and services over the next "few years". "It will show up." | Carney says inflation is going to rise. Food first, goods and services over the next "few years". "It will show up." |
| Updated | Updated |
| at 12.33pm BST | at 12.33pm BST |
| 11.10am BST | 11.10am BST |
| 11:10 | 11:10 |
| George Osborne decisively backs Heathrow expansion | George Osborne decisively backs Heathrow expansion |
| The former chancellor George Osborne has made it very clear that he is not ready for a quiet life on the backbenches. | The former chancellor George Osborne has made it very clear that he is not ready for a quiet life on the backbenches. |
| In a series of tweets on the controversial and long running subject of UK airport expansion, Osborne decisively backed Heathrow. | In a series of tweets on the controversial and long running subject of UK airport expansion, Osborne decisively backed Heathrow. |
| A formal decision is expected next Tuesday ... | A formal decision is expected next Tuesday ... |
| Time for a decision on airports & go for Heathrow. Economic case overwhelming;connects Northern Powerhouse;ensures Britain is open to world. | Time for a decision on airports & go for Heathrow. Economic case overwhelming;connects Northern Powerhouse;ensures Britain is open to world. |
| If we want Britain to be outward-looking,free-trading & global, we must expand the great airport that connects us to that world & that trade | If we want Britain to be outward-looking,free-trading & global, we must expand the great airport that connects us to that world & that trade |
| We can consider Gatwick expansion. But not at the expense of Heathrow - and not in parallel or else, in practice, nothing will get built. | We can consider Gatwick expansion. But not at the expense of Heathrow - and not in parallel or else, in practice, nothing will get built. |
| Updated | Updated |
| at 12.34pm BST | at 12.34pm BST |
| 10.53am BST | 10.53am BST |
| 10:53 | 10:53 |
| The former chancellor George Osborne has said Britain must work hard to retain its status as the world’s financial centre. | The former chancellor George Osborne has said Britain must work hard to retain its status as the world’s financial centre. |
| Comments this morning from Michel Sapin, the French finance minister, show that London’s rival European cities for finance are prepared for a fight to win business in the post-Brexit vote world. | Comments this morning from Michel Sapin, the French finance minister, show that London’s rival European cities for finance are prepared for a fight to win business in the post-Brexit vote world. |
| Just opened the huge new@UBS office in City. I broke the ground here in 2012. We must work hard to keep UK the global centre of finance | Just opened the huge new@UBS office in City. I broke the ground here in 2012. We must work hard to keep UK the global centre of finance |
| Updated | Updated |
| at 12.36pm BST | at 12.36pm BST |
| 10.47am BST | 10.47am BST |
| 10:47 | 10:47 |
| Samuel Tombs, the chief UK economist at Pantheon Macroeconomics, says the weak construction data suggests that the sector has relapsed into recession. | Samuel Tombs, the chief UK economist at Pantheon Macroeconomics, says the weak construction data suggests that the sector has relapsed into recession. |
| He adds: | He adds: |
| The construction sector’s outlook will brighten if the chancellor cancels planned cuts to public sector investment in next month’s autumn statement. | The construction sector’s outlook will brighten if the chancellor cancels planned cuts to public sector investment in next month’s autumn statement. |
| But with firms’ investment intentions still depressed by the Brexit vote, commercial construction work looks set to fall sharply. Meanwhile, the recent flat trend in housing starts and skilled labour shortages suggest that housebuilding will continue to track sideways for now. | But with firms’ investment intentions still depressed by the Brexit vote, commercial construction work looks set to fall sharply. Meanwhile, the recent flat trend in housing starts and skilled labour shortages suggest that housebuilding will continue to track sideways for now. |
| Construction output down 1.5% m/m in August; decline broad-based. Barring a surge in Sept, construction sector relapsed into recession in Q3 pic.twitter.com/YCTaokwFhN | Construction output down 1.5% m/m in August; decline broad-based. Barring a surge in Sept, construction sector relapsed into recession in Q3 pic.twitter.com/YCTaokwFhN |
| Updated | Updated |
| at 12.45pm BST | at 12.45pm BST |
| 10.40am BST | 10.40am BST |
| 10:40 | 10:40 |
| Supplementary point on Marmite-gate ... | Supplementary point on Marmite-gate ... |
| Unforeseen Brexit benefits #1: Iceland giving away free big jars of Marmite (with voucher). Have a slice of toast on me @hwallop. #deflation pic.twitter.com/DbEuh6rPMQ | Unforeseen Brexit benefits #1: Iceland giving away free big jars of Marmite (with voucher). Have a slice of toast on me @hwallop. #deflation pic.twitter.com/DbEuh6rPMQ |
| Updated | Updated |
| at 12.45pm BST | at 12.45pm BST |