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| Mark Carney confirms he'll leave Bank of England in June 2019, regardless of Brexit timetable – business live | |
| (35 minutes later) | |
| 10.44am GMT | |
| 10:44 | |
| Q: Did Theresa May’s apparent criticism of central banks in her recent conference speech influence your decision to only serve another 12 months? | |
| No, Carney replies. | |
| 10.37am GMT | |
| 10:37 | |
| Mark Carney denies that the uncertainty over his departure date has created uncertainty. | |
| There are “far bigger issues’ in the UK economy, and the global economy, than my term lengths, he says. | |
| There may be, concedes Andrew Tyrie. | |
| There are, Carney insists! | |
| 10.35am GMT | |
| 10:35 | |
| Carney: I'm leaving in June 2019, whatever happens with Brexit | |
| Mark Carney’s grilling at the Treasury Committee is underway. | |
| Chairman Andrew Tyrie asks the Bank of England governor how much uncertainty has been caused by his decision to initially only serve five years, and then extend it by 12 months. Wouldn’t it be better to keep governors to fixed terms of eight years? | |
| Carney says it is a great privilege and a great responsibility to serve at the Bank of England. He had planned to only do a five year term, but was then asked to do an extra three years. | |
| Q: So you were asked to extend it to eight years, but only chose to add on 12 months? | |
| Yes, says Carney. | |
| Q: What happens if the process of triggering article 50 takes longer than expected, and isn’t complete by the end of June 2019 (when Carney’s six-year term ends)? | |
| I have a family, Carney explains, and there are “reasonable limits” to how long he can be separated from them (the governor’s wife, Diane and their four daughters plan to return to Canada in 2018). | |
| Carney says he added one year to his term “out of a sense of responsibility” | |
| Theresa May has made it clear that she plans to trigger article 50 by March 2017, he says, so Britain should have left the EU by March 2019. | |
| But he won’t speculate about hypothetical scenarios, and he doesn’t want his departure date to be seen as a ‘judgement’ on the Brexit timetable. | |
| Tyrie won’t let this lie, demanding to know.... | |
| Q: Are you definitely, irrevocably, leaving the bank in 2019? | |
| It sounds like you want to get rid of me, jokes Carney. | |
| And then he insists that he will indeed leave the BoE on 30 June 2019. | |
| Updated | |
| at 10.44am GMT | |
| 10.20am GMT | |
| 10:20 | |
| While we wait for Mr Carney, there’s time to flag up that UK house prices rose by 7.7% in the 12 months to September. | |
| That matches August’s reading, with houses in the south of England driving the market up. | |
| UK house prices grew at a healthy 7.7%y/y clip in September. East of England led the way with 12.1%y/y growth while N. East at only 1.5%y/y. pic.twitter.com/LSet77CLtj | |
| Richard Snook, senior economist at PwC, says there are signs that the market may be cooling.... | |
| “We now have three months of post-Brexit official housing figures, which show price growth remaining robust, but fewer properties changing hands. At the start of the year, we expected slower house price growth, but in fact it has shown impressive resilience: in the first three quarters of the year average annual house prices were up by around 8% across the UK compared to the same period last year. | |
| “But high prices are causing some buyers to stay out of the market altogether. The ONS data show residential transactions in September were just 93,000, 11.3% lower than the previous year. This implies that underlying demand may be weakening as property becomes less and less affordable.” | |
| 10.14am GMT | |
| 10:14 | |
| Bank of England governor Mark Carney is due to give evidence to the Treasury Committee in parliament now, on the Bank’s latest quarterly inflation report. | |
| There’s a livefeed here. | |
| Updated | |
| at 10.14am GMT | |
| 10.11am GMT | |
| 10:11 | |
| Newsflash from Brussels: the eurozone economy grew by 0.3% in the third quarter of this year, matching Q2’s growth rate. | |
| Although Germany and France only grew by 0.2%, Italy expanded by 0.3% and the Netherlands and Spain both posted healthy growth of 0.7%. | |
| Euro area GDP +0.3% in Q3 2016, +1.6% compared with Q3 2015 #Eurostat - https://t.co/IYKjKoK4hg pic.twitter.com/ELfGUzo4PN | |
| 10.04am GMT | 10.04am GMT |
| 10:04 | 10:04 |
| Economists: Inflation will jump in 2017 | Economists: Inflation will jump in 2017 |
| A string of economist are predicting that Britain’s inflation rate will keep rising in the months ahead, despite dropping to 0.9% in October. | A string of economist are predicting that Britain’s inflation rate will keep rising in the months ahead, despite dropping to 0.9% in October. |
| Tom Stevenson, investment director for personal investing at Fidelity International, says | Tom Stevenson, investment director for personal investing at Fidelity International, says |
| “The expected rise in inflation paused for breath today as higher fuel prices were offset by slower rises in the price of clothes and university fees and cheaper hotel stays. | “The expected rise in inflation paused for breath today as higher fuel prices were offset by slower rises in the price of clothes and university fees and cheaper hotel stays. |
| “Against all expectations, the CPI rose by just 0.9% in the year to October, slightly lower than September’s 1% increase. However prices are still rising faster than at any time since late 2014. The rise in prices continue to be driven by sterling’s recent weakness which has raised the cost of imported fuel and food. | “Against all expectations, the CPI rose by just 0.9% in the year to October, slightly lower than September’s 1% increase. However prices are still rising faster than at any time since late 2014. The rise in prices continue to be driven by sterling’s recent weakness which has raised the cost of imported fuel and food. |
| “Consumers can expect UK inflation to continue rising into next year as the impact of the pound’s slide continues to be felt. The conventional wisdom is that the Bank of England’s 2% inflation target will be left behind in 2017. | “Consumers can expect UK inflation to continue rising into next year as the impact of the pound’s slide continues to be felt. The conventional wisdom is that the Bank of England’s 2% inflation target will be left behind in 2017. |
| Jeremy Cook of World First, the currency exchange firm predicts sharp prices rises in 2017: | Jeremy Cook of World First, the currency exchange firm predicts sharp prices rises in 2017: |
| In our estimates it will be the early part of the New Year that sees the majority of the price rises. Retailers are some of the smartest companies out there and they know it would be suicide to hike prices now pre-Christmas. | In our estimates it will be the early part of the New Year that sees the majority of the price rises. Retailers are some of the smartest companies out there and they know it would be suicide to hike prices now pre-Christmas. |
| Of course, the tightness of budgets in the retail environment means that any price rises are going to be painful – and low cost operators and discounters will be ready to pounce - but they will have to come or we will likely see additional seasonal and structural unemployment increases in 2017.” | Of course, the tightness of budgets in the retail environment means that any price rises are going to be painful – and low cost operators and discounters will be ready to pounce - but they will have to come or we will likely see additional seasonal and structural unemployment increases in 2017.” |
| No use talking about inflation now IMO. It will be the New Year that sees the price rises as retailers cave to input pressures. | No use talking about inflation now IMO. It will be the New Year that sees the price rises as retailers cave to input pressures. |
| Neil Wilson of ETX Capital is concerned by the jump in input prices (see earlier post) | Neil Wilson of ETX Capital is concerned by the jump in input prices (see earlier post) |
| While inflation eased last month there is a ticking time bomb in the PPI data, which measures the costs of goods for manufacturers. And here there is a sign that much higher consumer inflation is on its way. | While inflation eased last month there is a ticking time bomb in the PPI data, which measures the costs of goods for manufacturers. And here there is a sign that much higher consumer inflation is on its way. |
| The ONS data showed factory gate prices for goods produced by UK manufacturers rose 2.1% in the year to October 2016, which was a sharp jump from the 1.3% in the year to September 2016. | The ONS data showed factory gate prices for goods produced by UK manufacturers rose 2.1% in the year to October 2016, which was a sharp jump from the 1.3% in the year to September 2016. |
| Core input prices were up 9.9% in the year to October 2016, versus a rise of 5.1% in the year to September 2016. | Core input prices were up 9.9% in the year to October 2016, versus a rise of 5.1% in the year to September 2016. |
| Howard Archer of IHS Global Insight agrees: | Howard Archer of IHS Global Insight agrees: |
| Oct surge in #UK producer input & output #prices suggest dip seen in consumer price #inflation to 0.9% in Oct will prove a brief respite | Oct surge in #UK producer input & output #prices suggest dip seen in consumer price #inflation to 0.9% in Oct will prove a brief respite |
| 9.57am GMT | 9.57am GMT |
| 09:57 | 09:57 |
| We shouldn’t get carried away by this inflation slowdown - it will surely only be temporary. | We shouldn’t get carried away by this inflation slowdown - it will surely only be temporary. |
| The detail of today’s report shows that Britain’s CPI rate dipped last month because clothing prices had jumped sharply a year earlier, in October 2015. | The detail of today’s report shows that Britain’s CPI rate dipped last month because clothing prices had jumped sharply a year earlier, in October 2015. |
| So there’s a ‘base effect’, where last year’s rise drops out of the calculations. | So there’s a ‘base effect’, where last year’s rise drops out of the calculations. |
| The ONS explains: | The ONS explains: |
| Clothing and footwear: the downward effect came mainly from garments (in particular women’s outerwear), for which prices rose by 0.2% between September and October 2016, compared with a larger rise of 2.3% a year earlier. It is important to note that this followed a relatively large increase in prices in September 2016, which resulted in an upward contribution to the change in the rate of a similar magnitude to the downward effect seen in October. | Clothing and footwear: the downward effect came mainly from garments (in particular women’s outerwear), for which prices rose by 0.2% between September and October 2016, compared with a larger rise of 2.3% a year earlier. It is important to note that this followed a relatively large increase in prices in September 2016, which resulted in an upward contribution to the change in the rate of a similar magnitude to the downward effect seen in October. |
| And it’s also important to flag up that education hasn’t suddenly become cheaper. It’s just becoming less expensive at a slower rate. | And it’s also important to flag up that education hasn’t suddenly become cheaper. It’s just becoming less expensive at a slower rate. |
| The ONS says: | The ONS says: |
| Education: charges, overall, rose by 2.0% between September and October this year compared with a larger rise of 3.6% between the same 2 months a year ago. The downward contribution came principally from UK and EU student tuition fees, where the impact from the rise in the cap for tuition fees (first introduced for new students in England in 2012) was smaller this year than in 2015. This was because nearly all students are already paying the higher rate of fees whereas last year the fees for fourth year courses rose to the higher rates. In addition there were more modest price increases for part-time and postgraduate fees compared with last year. | Education: charges, overall, rose by 2.0% between September and October this year compared with a larger rise of 3.6% between the same 2 months a year ago. The downward contribution came principally from UK and EU student tuition fees, where the impact from the rise in the cap for tuition fees (first introduced for new students in England in 2012) was smaller this year than in 2015. This was because nearly all students are already paying the higher rate of fees whereas last year the fees for fourth year courses rose to the higher rates. In addition there were more modest price increases for part-time and postgraduate fees compared with last year. |
| On the other hand, transport costs have certainly pushed up. Motor fuel prices rose by 2.3% between September and October 2016. | On the other hand, transport costs have certainly pushed up. Motor fuel prices rose by 2.3% between September and October 2016. |
| Updated | Updated |
| at 10.01am GMT | at 10.01am GMT |
| 9.51am GMT | 9.51am GMT |
| 09:51 | 09:51 |
| Record jump in UK producer prices | Record jump in UK producer prices |
| Today’s figures also show that Britain’s manufacturers are suffering from a hefty dose of inflation, due to the weak pound. | Today’s figures also show that Britain’s manufacturers are suffering from a hefty dose of inflation, due to the weak pound. |
| Britain’s Producer Prices index spiked by 4.6% in October - the biggest monthly rise on record. | Britain’s Producer Prices index spiked by 4.6% in October - the biggest monthly rise on record. |
| UK firms are suffering from the weakness in sterling since June’s referendum, which is making raw materials and fuel much pricier. | UK firms are suffering from the weakness in sterling since June’s referendum, which is making raw materials and fuel much pricier. |
| UK inflation posts surprise fall in October, but watch this space. Producer prices for raw material & oil +4.6%, biggest monthly rise ever. | UK inflation posts surprise fall in October, but watch this space. Producer prices for raw material & oil +4.6%, biggest monthly rise ever. |
| At present, retailers appear to be absorbing the cost rather than passing it onto consumers. | At present, retailers appear to be absorbing the cost rather than passing it onto consumers. |
| But with imported goods prices surging, they may not be able to keep shop prices down for much longer.... | But with imported goods prices surging, they may not be able to keep shop prices down for much longer.... |
| Weak inflation this month. But higher prices incoming. ONS says imported goods prices up 14.1% in yr to Sep. Biggest increase since Sep 2011 | Weak inflation this month. But higher prices incoming. ONS says imported goods prices up 14.1% in yr to Sep. Biggest increase since Sep 2011 |
| 9.46am GMT | 9.46am GMT |
| 09:46 | 09:46 |
| UK inflation: the key charts | UK inflation: the key charts |
| This chart shows how Britain’s CPI rate dipped, after jumping in September: | This chart shows how Britain’s CPI rate dipped, after jumping in September: |
| This chart shows how clothing, recreation and educational all pulled inflation back: | This chart shows how clothing, recreation and educational all pulled inflation back: |
| And this one shows how transport costs, including petrol, have jumped over the last year: | And this one shows how transport costs, including petrol, have jumped over the last year: |
| 9.38am GMT | 9.38am GMT |
| 09:38 | 09:38 |
| The pound is falling sharply, as traders react to today’s inflation report. | The pound is falling sharply, as traders react to today’s inflation report. |
| Sterling has lost three-quarters of a cent, to $1.241 against the US dollar. | Sterling has lost three-quarters of a cent, to $1.241 against the US dollar. |
| They will be calculating that there’s less chance of an early interest rate rise: | They will be calculating that there’s less chance of an early interest rate rise: |
| Pound falls against dollar after CPI inflation rate unexpectedly drops to 0.9% https://t.co/DvOCJLkTMI pic.twitter.com/uK3NyYv78Z | Pound falls against dollar after CPI inflation rate unexpectedly drops to 0.9% https://t.co/DvOCJLkTMI pic.twitter.com/uK3NyYv78Z |
| 9.36am GMT | 9.36am GMT |
| 09:36 | 09:36 |
| The Office for National Statistics says cheaper clothing helped to drive the UK inflation rate down last month, countering a rise in fuel costs. | The Office for National Statistics says cheaper clothing helped to drive the UK inflation rate down last month, countering a rise in fuel costs. |
| The main downward contributors to the change in the rate were prices for clothing and university tuition fees, which rose by less than they did a year ago, along with falling prices for certain games and toys, overnight hotel stays and non-alcoholic beverages. | The main downward contributors to the change in the rate were prices for clothing and university tuition fees, which rose by less than they did a year ago, along with falling prices for certain games and toys, overnight hotel stays and non-alcoholic beverages. |
| These downward pressures were offset by rising prices for motor fuels, and by prices for furniture and furnishings, which fell by less than they did a year ago. | These downward pressures were offset by rising prices for motor fuels, and by prices for furniture and furnishings, which fell by less than they did a year ago. |
| 9.31am GMT | 9.31am GMT |
| 09:31 | 09:31 |
| UK inflation rate drops to 0.9% | UK inflation rate drops to 0.9% |
| Breaking! Britain’s inflation rate has fallen! | Breaking! Britain’s inflation rate has fallen! |
| The consumer prices index only rose by 0.9% in October, new figures show, compared with 1.0% in September. | The consumer prices index only rose by 0.9% in October, new figures show, compared with 1.0% in September. |
| That’s a surprise; economists had expected CPI to rise to 1.1%. | That’s a surprise; economists had expected CPI to rise to 1.1%. |
| More to follow.... | More to follow.... |
| 9.20am GMT | 9.20am GMT |
| 09:20 | 09:20 |
| Bond market 'pauses for breath' | Bond market 'pauses for breath' |
| Here’s Fiona Cincotta of City Index explaining why the bond market rout has taken a break this morning: | Here’s Fiona Cincotta of City Index explaining why the bond market rout has taken a break this morning: |
| The turmoil in the bond market appears to be pausing for breath, which is quite typical after the moves we have seen. | The turmoil in the bond market appears to be pausing for breath, which is quite typical after the moves we have seen. |
| The global bond market has sold off at an extraordinary rate since Trump won the presidential race 6 days ago and is currently on track for its worst monthly decline since 2003. | The global bond market has sold off at an extraordinary rate since Trump won the presidential race 6 days ago and is currently on track for its worst monthly decline since 2003. |
| Debt prices have fallen sharply as investors contemplate a world of higher inflation, increasing interest rate and political uncertainty, however this sell off is now showing signs of slowing. It almost seems ironic that Yellen & co. have been trying to steepen the yield curve for years and yet Trump achieved it in a few days. | Debt prices have fallen sharply as investors contemplate a world of higher inflation, increasing interest rate and political uncertainty, however this sell off is now showing signs of slowing. It almost seems ironic that Yellen & co. have been trying to steepen the yield curve for years and yet Trump achieved it in a few days. |
| The challenge is that if this can happen in conjunction with a strengthening economy, if achieved then it could be good news. However, apart from campaign rhetoric we still know very little about Trump’s actual plans. | The challenge is that if this can happen in conjunction with a strengthening economy, if achieved then it could be good news. However, apart from campaign rhetoric we still know very little about Trump’s actual plans. |
| 9.18am GMT | 9.18am GMT |
| 09:18 | 09:18 |
| The bond markets are calmer this morning, as investors take a breather after several days of falls. | The bond markets are calmer this morning, as investors take a breather after several days of falls. |
| Government bond prices have recovered in early trading, pulling yields down from yesterday’s highs. | Government bond prices have recovered in early trading, pulling yields down from yesterday’s highs. |
| The UK 10-year gilt yield has dropped to 1.39%, from 1.43% last night [yields fall when prices rise] | The UK 10-year gilt yield has dropped to 1.39%, from 1.43% last night [yields fall when prices rise] |
| US Treasury bills have also clawed back some ground, having been sold off heavily since Donald Trump won the race to the White House (wiping out $1trn of value). | US Treasury bills have also clawed back some ground, having been sold off heavily since Donald Trump won the race to the White House (wiping out $1trn of value). |
| These charts from Bloomberg TV show how yields have dipped this morning, but are much higher than a week ago: | These charts from Bloomberg TV show how yields have dipped this morning, but are much higher than a week ago: |
| 9.08am GMT | 9.08am GMT |
| 09:08 | 09:08 |
| Italian GDP rises by 0.3% | Italian GDP rises by 0.3% |
| Good news from Italy! Its economy has returned to growth, with GDP expanding by 0.3% in the last quarter. | Good news from Italy! Its economy has returned to growth, with GDP expanding by 0.3% in the last quarter. |
| That means the Italian economy has beaten expectations - and beaten Germany, whose 0.2% growth rate looks even more sluggish now. | That means the Italian economy has beaten expectations - and beaten Germany, whose 0.2% growth rate looks even more sluggish now. |
| Italy GDP Growth Rate https://t.co/XebmdJYjsO pic.twitter.com/qYFZoDmVTc | Italy GDP Growth Rate https://t.co/XebmdJYjsO pic.twitter.com/qYFZoDmVTc |
| Italian GDP expanded by 0.3% QoQ in Q3. Not exactly booming, but still better than expected. | Italian GDP expanded by 0.3% QoQ in Q3. Not exactly booming, but still better than expected. |
| @fwred and all the more welcome as is the only one to (just) beat forecasts among all the Europe Q3 GDP data today | @fwred and all the more welcome as is the only one to (just) beat forecasts among all the Europe Q3 GDP data today |
| On an annual basis, Italy’s economy was 0.9% larger than a year ago -- up from 0.7% in the second quarter. | On an annual basis, Italy’s economy was 0.9% larger than a year ago -- up from 0.7% in the second quarter. |
| This is a much-needed boost for Matteo Renzi, as the prime minister faces a crunch referendum over constitutional reforms in December. | This is a much-needed boost for Matteo Renzi, as the prime minister faces a crunch referendum over constitutional reforms in December. |
| Italian GDP rises 0.3 per cent in the third quarter, beating expectations - boost for Renzi pre-referendum | Italian GDP rises 0.3 per cent in the third quarter, beating expectations - boost for Renzi pre-referendum |
| The latest polls show the 'No' in the Italian referendum extending lead to 5%+. Given pollsters' performance I guess there's still a chance. pic.twitter.com/jw7KAdMKjc | The latest polls show the 'No' in the Italian referendum extending lead to 5%+. Given pollsters' performance I guess there's still a chance. pic.twitter.com/jw7KAdMKjc |