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Bank of England deputy opposes rate hike, as UK house prices rebound - business live Bank of England deputy opposes rate hike, as UK house prices rebound - business live
(35 minutes later)
1.29pm BST
13:29
Lunchtime summary
Time for a quick recap
The split at the Bank of England over when to start raising interest rates has deepened, after deputy governor Sir Jon Cunliffe declared his hand. Cunliffe is firmly in the ‘not yet’ camp, putting him alongside boss Mark Carney, but in opposition to at least two other policymakers.
City economists are expecting some tense meeting at the Bank of England in the months ahead, as the central bank tries to juggle high inflation and slowing consumer spending.
Marc Ostwald of ADM Investor Services says:
The Bank of England is clearly very divided, with deputy governor Cunliffe this morning sending rather mixed signals, ostensibly backing Carney by saying this was not the time to raise interest rates, but also noting “(We) do have to look at what’s happening to domestic inflation pressure, and I think that on the data we have at the moment, gives us a bit of time to see how this evolves” - ‘a bit of time’ being the key observation.
UK house prices have reversed three months of falls, by rising 1.1% in June. Housing experts say that a lack of supply is supporting prices (Britain’s record low interest rates must be helping, too!)
However, price rises in London have slowed to the lowest rate since 2012.
It’s been a bad morning for Tesco workers; one in four of its head office staff are being axed under a cost-cutting drive.
Britain’s Co-operative Group will be left with just a 1% stake in the Co-op Bank after a deal was clinched with hedge funds and other investors to pump £700m into the loss-making lender.
In the markets, the euro has hit a one-year high against the US dollar following confident noises from the European Central Bank this week.
Some experts, though, think the markets have got carried away - and that Mario Draghi wasn’t as hawkish as reported.
Still getting lots of questions re Draghi’s speech in Sintra. Hawkish market reaction largely unjustified imo. 1/nhttps://t.co/guYqjfEdCW
The FTSE 100 is failing to provide any drama, though; it’s currently up one solitary point at 7436.
1.25pm BST
13:25
Helena Smith
Meanwhile, in what amounts to the first public sign that light is finally at the end of the seemingly never-ending Greek crisis tunnel, creditors have announced that the country could tap international capital markets by the end of the year.
Helena Smith reports
“Greece is entering the final year of the program with a real opportunity to regain market access and actually end the program on schedule in August next year,” the EU Commission’s Greek mission chief Declan Costello told a conference outside Athens.
But there were also warnings:
Nicola Giammarioli, who is Greece mission chief for the euro zone’s rescue fund, the European Stability Mechanism, cautioned that reforms weren’t enough. After legislating them, Athens had to implement them, she said.
“We are half-way. We have a good framework for (non-performing loan) management. Now its time for NPLs [non-performing loans] to be reduced. Greece has created an independent tax authority. Now it’s time to collect taxes … A privatisation and asset fund has been set up.
Now it’s time to privatize and generate value.”
Greek bonds have already been rallying recently, on hopes that the country could return to the financial markets. Earlier this week its benchmark 10-year debt hit its highest levels since the debt crisis began.
Updated
at 1.39pm BST
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Greek businesses create a stink over rubbish workers' strikeGreek businesses create a stink over rubbish workers' strike
Helena SmithHelena Smith
Ouch! Over in a sweltering Athens it’s not only the temperature that is rising.Ouch! Over in a sweltering Athens it’s not only the temperature that is rising.
Greek businessmen are now sounding the alarm after striking refuse workers decided to continue their walkout last night.Greek businessmen are now sounding the alarm after striking refuse workers decided to continue their walkout last night.
With rubbish continuing to pile up at an alarming rate on the sweltering streets, will Greece’s tourist industry take a hit?With rubbish continuing to pile up at an alarming rate on the sweltering streets, will Greece’s tourist industry take a hit?
Helena Smith reports from the Greek capitalHelena Smith reports from the Greek capital
With mounds of rubbish now turning into mountains of rubbish across the capital, the Athens Chamber of Tradesman has waded in with an appeal to all sides to make the concessions needed to end the strike.With mounds of rubbish now turning into mountains of rubbish across the capital, the Athens Chamber of Tradesman has waded in with an appeal to all sides to make the concessions needed to end the strike.
The 11-day walk-out was prolonged last night after municipal workers rejected prime minister Alexis Tsipras’ proposed compromise of improved work conditions, including permanent jobs and thousands of new hirings, as insufficient.The 11-day walk-out was prolonged last night after municipal workers rejected prime minister Alexis Tsipras’ proposed compromise of improved work conditions, including permanent jobs and thousands of new hirings, as insufficient.
In a sharply-worded statement the Chamber warned of the growing risk of the rubbish becoming a public health “bomb” and accused strikers of holding millions of citizens, tourists and tradesman hostage to their demands.In a sharply-worded statement the Chamber warned of the growing risk of the rubbish becoming a public health “bomb” and accused strikers of holding millions of citizens, tourists and tradesman hostage to their demands.
“The images are disheartening. The tons of rubbish now on the roads conjure a third world country, definitely not a European Union state. Tourists, who have chosen Greece as their holiday destination, walk amid mountains of rubbish while the combination of the heat wave and rubbish is a direct threat to public health.“The images are disheartening. The tons of rubbish now on the roads conjure a third world country, definitely not a European Union state. Tourists, who have chosen Greece as their holiday destination, walk amid mountains of rubbish while the combination of the heat wave and rubbish is a direct threat to public health.
The economic damage for thousands of professional restaurateurs and tourist enterprises is huge.”The economic damage for thousands of professional restaurateurs and tourist enterprises is huge.”
Athens mayor Giorgos Kaminis has also intervened calling the unionists’ demands “excessive” and saying a government amendment legislating labour reforms more than met what they had been hoping for.Athens mayor Giorgos Kaminis has also intervened calling the unionists’ demands “excessive” and saying a government amendment legislating labour reforms more than met what they had been hoping for.
With debt-stricken Greece dependent on international bailout funds, Tsipras told unionists he could not openly defy creditors who have demanded strict streamlining of government-controlled bodies.With debt-stricken Greece dependent on international bailout funds, Tsipras told unionists he could not openly defy creditors who have demanded strict streamlining of government-controlled bodies.
The striking workers have vowed to continue the strike until Thursday when rallies are also expected. In northern Thessaloniki, Greece’s second biggest city, local authorities announced that they would outsource garbage collection to the private sector.The striking workers have vowed to continue the strike until Thursday when rallies are also expected. In northern Thessaloniki, Greece’s second biggest city, local authorities announced that they would outsource garbage collection to the private sector.
“We have documents from the department of health and Kelpno (the Hellenic centre for disease control and prevention) saying that there is a serious danger for public health. Today we will start spraying,” said Thomas Psarras in charge of public cleanliness for the municipality.“We have documents from the department of health and Kelpno (the Hellenic centre for disease control and prevention) saying that there is a serious danger for public health. Today we will start spraying,” said Thomas Psarras in charge of public cleanliness for the municipality.
Temperatures are expected to rise to 43 degrees Celsius by Friday as Greece swlters under its first summer heatwave.Temperatures are expected to rise to 43 degrees Celsius by Friday as Greece swlters under its first summer heatwave.
Greek journalist Omaira Gill reports that life goes on, but the situation is hardly ideal:Greek journalist Omaira Gill reports that life goes on, but the situation is hardly ideal:
Last Saturday I had the 1st date of the whole year with my husband amid the sultry summer evening breeze & stinking garbage #romance https://t.co/fpRPhX8TdPLast Saturday I had the 1st date of the whole year with my husband amid the sultry summer evening breeze & stinking garbage #romance https://t.co/fpRPhX8TdP
In the last few minutes, there is now chatter that the government could forcibly mobilising municipal workers to collect rubbish.In the last few minutes, there is now chatter that the government could forcibly mobilising municipal workers to collect rubbish.
Spokesman Dimitris Tzanakopoulos has just ruled out but said while “the government will not allow the endangering of public health,” it won’t agree to “private interests” replacing the strikers.Spokesman Dimitris Tzanakopoulos has just ruled out but said while “the government will not allow the endangering of public health,” it won’t agree to “private interests” replacing the strikers.
UpdatedUpdated
at 1.05pm BSTat 1.05pm BST
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Here’s some speedy reaction to Tesco’s job cuts plans, from Hannah Maundrell, Editor in Chief of money.co.uk :Here’s some speedy reaction to Tesco’s job cuts plans, from Hannah Maundrell, Editor in Chief of money.co.uk :
“It’s sad but not surprising that Tesco are making job cuts at its head office. Last week Tesco said they needed to remain “sustainable and cost effective” and this is evidently their way of streamlining the business.“It’s sad but not surprising that Tesco are making job cuts at its head office. Last week Tesco said they needed to remain “sustainable and cost effective” and this is evidently their way of streamlining the business.
“It’s undoubtedly distressing news for employees of Tesco and their families. Now is the time to check what redundancy rights you have and dig out any income or mortgage protection policies you hold just in case.“It’s undoubtedly distressing news for employees of Tesco and their families. Now is the time to check what redundancy rights you have and dig out any income or mortgage protection policies you hold just in case.
“It’s also worth checking what support from the government you’d be entitled to if you’ve been left out of work and do a bit of an overhaul of your finances so you know how your budget will cope if you’re faced with a temporary gap in employment.”“It’s also worth checking what support from the government you’d be entitled to if you’ve been left out of work and do a bit of an overhaul of your finances so you know how your budget will cope if you’re faced with a temporary gap in employment.”
Money.co.uk have also published this guide to redundancy rights in the UK.Money.co.uk have also published this guide to redundancy rights in the UK.
Here’s our story on the job cuts:Here’s our story on the job cuts:
Tesco to cut 1,200 head office jobs https://t.co/XgPvl9aEVKTesco to cut 1,200 head office jobs https://t.co/XgPvl9aEVK
12.01pm BST12.01pm BST
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Tesco cuts 1,200 head office jobsTesco cuts 1,200 head office jobs
Another newsflash: Tesco is reportedly axing 1,200 jobs at its head office.Another newsflash: Tesco is reportedly axing 1,200 jobs at its head office.
That’s a big blow to the supermarket chain’s workforce, as bosses press on with efforts to cut costs.That’s a big blow to the supermarket chain’s workforce, as bosses press on with efforts to cut costs.
This means that one in four staff at Tesco’s offices at Welwyn Garden City and Hatfield would go, according to the Press Association.This means that one in four staff at Tesco’s offices at Welwyn Garden City and Hatfield would go, according to the Press Association.
This comes hot on the heels of the planned closure of Tesco’s Cardiff call centre, which could eliminate 1,100 jobs.This comes hot on the heels of the planned closure of Tesco’s Cardiff call centre, which could eliminate 1,100 jobs.
PA reporting Tesco is axing 1,200 head office jobs. After the 1,100 call centre jobs hit last week. Just as things were looking up for themPA reporting Tesco is axing 1,200 head office jobs. After the 1,100 call centre jobs hit last week. Just as things were looking up for them
11.56am BST11.56am BST
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Co-op rescue deal finally agreed.Co-op rescue deal finally agreed.
Jill TreanorJill Treanor
Newsflash: At long last, Britain’s troubled Co-operative Bank has finally agreed a capital raising plan.Newsflash: At long last, Britain’s troubled Co-operative Bank has finally agreed a capital raising plan.
After months of negotiations, Co-Op Bank will receive £700m of fresh capital, and the Co-operative Group’s stake the company will fall to just 1%.After months of negotiations, Co-Op Bank will receive £700m of fresh capital, and the Co-operative Group’s stake the company will fall to just 1%.
My colleague Jill Treanor has the details:My colleague Jill Treanor has the details:
A rescue deal for the Co-operative Bank has been clinched under which hedge funds and other investors will pump £700m into the loss-making operation.A rescue deal for the Co-operative Bank has been clinched under which hedge funds and other investors will pump £700m into the loss-making operation.
The capital injection by means that the bank, which has 4m customers, will continue as a standalone entity after it abandoned efforts to find a buyer.The capital injection by means that the bank, which has 4m customers, will continue as a standalone entity after it abandoned efforts to find a buyer.
However, the structure of deal means that the Co-operative Group of supermarkets and funeral homes that used to own the bank will be left with a 1% stake in the bank. The mutual’s stake had already fallen to 20% after previous rescue operations, the first of which was in 2013 when the scale of the problems in the bank were uncovered, and it refused to put more money in this time.However, the structure of deal means that the Co-operative Group of supermarkets and funeral homes that used to own the bank will be left with a 1% stake in the bank. The mutual’s stake had already fallen to 20% after previous rescue operations, the first of which was in 2013 when the scale of the problems in the bank were uncovered, and it refused to put more money in this time.
The bank - which put itself up for sale in February - said that despite the tiny stake owed by the Group, its “name, brand and commitment to co-operative values, set out in its ethical policy, will continue unaffected”.The bank - which put itself up for sale in February - said that despite the tiny stake owed by the Group, its “name, brand and commitment to co-operative values, set out in its ethical policy, will continue unaffected”.
Dennis Holt, chairman said: “The board is pleased to confirm this proposal for a recapitalisation which will mean that the Co-operative Bank can continue as a viable stand-alone entity, with values and ethics at its heart. It is a great outcome for our customers. Our investors share our commitment to building our distinctive ethical franchise and see strong future growth potential for The Co-operative Bank.”Dennis Holt, chairman said: “The board is pleased to confirm this proposal for a recapitalisation which will mean that the Co-operative Bank can continue as a viable stand-alone entity, with values and ethics at its heart. It is a great outcome for our customers. Our investors share our commitment to building our distinctive ethical franchise and see strong future growth potential for The Co-operative Bank.”
The deal follows a failed attempt to sell Co-op Bank, which has suffered years of losses and ran up a £1.5bn capital blackhole following a flawed merger with Britannia Building Society in 2009.The deal follows a failed attempt to sell Co-op Bank, which has suffered years of losses and ran up a £1.5bn capital blackhole following a flawed merger with Britannia Building Society in 2009.
11.49am BST11.49am BST
11:4911:49
Euro hits one-year high as Deutsche tears up its forecastsEuro hits one-year high as Deutsche tears up its forecasts
Deutsche Bank’s foreign exchange strategist have been forced into a screeching u-turn this morning.Deutsche Bank’s foreign exchange strategist have been forced into a screeching u-turn this morning.
They have abandoned their forecast that the euro would end the year close to parity with the US dollar, at just $1.03. They now expect it to have strengthened to $1.16 by the end of 2017.They have abandoned their forecast that the euro would end the year close to parity with the US dollar, at just $1.03. They now expect it to have strengthened to $1.16 by the end of 2017.
Deutsche threw in the towel after hearing ECB president Mario Draghi give an optimistic assessment of the eurozone yesterday, saying that growth was broadening amid moew reflationary pressures.Deutsche threw in the towel after hearing ECB president Mario Draghi give an optimistic assessment of the eurozone yesterday, saying that growth was broadening amid moew reflationary pressures.
The bank says:The bank says:
We are completely revising our euro outlook for the rest of the year. The speech is not the fundamental driver behind the change in view, but it aptly marks the culmination of a number of developments that have caused us to change our forecasts.We are completely revising our euro outlook for the rest of the year. The speech is not the fundamental driver behind the change in view, but it aptly marks the culmination of a number of developments that have caused us to change our forecasts.
Arguably Deutsche are a little late to the non-parity party; the euro has been climbing steadily against the US dollar this year, and indeed hit a one-year high of $1.136 this morning.Arguably Deutsche are a little late to the non-parity party; the euro has been climbing steadily against the US dollar this year, and indeed hit a one-year high of $1.136 this morning.
Jamie McGeever of Reuters tweets:Jamie McGeever of Reuters tweets:
A turning point? The biggest euro bear throws in the towel. Deutsche Bank sees $1.16 or higher by year end. That forecast was once $0.85.A turning point? The biggest euro bear throws in the towel. Deutsche Bank sees $1.16 or higher by year end. That forecast was once $0.85.
Deutsche Bank's "euroglut" theory looks shot to pieces. In 2015 the bank forecast euro at $0.85 by end-2017. They now see $1.16 or higher.Deutsche Bank's "euroglut" theory looks shot to pieces. In 2015 the bank forecast euro at $0.85 by end-2017. They now see $1.16 or higher.
10.52am BST10.52am BST
10:5210:52
Sir Jon Cunliffe’s reluctance to vote for an early interest rate rise is keeping the pound at its highest level against the US dollar since the general election.Sir Jon Cunliffe’s reluctance to vote for an early interest rate rise is keeping the pound at its highest level against the US dollar since the general election.
Sterling jumped over $1.283 this morning, it highest point since the shock exit polls showed Britain had voted for a hung parliament.Sterling jumped over $1.283 this morning, it highest point since the shock exit polls showed Britain had voted for a hung parliament.
There’s not much other drama in the City, though. Distribution firm Bunzl is the biggest riser on the FTSE 100, up almost 4%, but the wider FSTE 100 is now flat.There’s not much other drama in the City, though. Distribution firm Bunzl is the biggest riser on the FTSE 100, up almost 4%, but the wider FSTE 100 is now flat.
Joshua Mahony, market analyst at IG, says:Joshua Mahony, market analyst at IG, says:
The FTSE has been moving lower once more this morning, with a dovish comment from BoE deputy governor Jon Cunliffe helping recover much of the initial selling at the openThe FTSE has been moving lower once more this morning, with a dovish comment from BoE deputy governor Jon Cunliffe helping recover much of the initial selling at the open
10.34am BST10.34am BST
10:3410:34
The news that UK house prices rose by 1.1% this month (but not in London!) has caused plenty of chatter in the City.The news that UK house prices rose by 1.1% this month (but not in London!) has caused plenty of chatter in the City.
Caroline Simmons, Deputy Head of the UK Investment Office at UBS Wealth Management, predicts that prices will only rise modestly over the next year.Caroline Simmons, Deputy Head of the UK Investment Office at UBS Wealth Management, predicts that prices will only rise modestly over the next year.
“Whilst house price growth bounced back in June the figures still point to a slowing picture overall with annual house price growth now at just 3%. Going forward, recent political uncertainty from Theresa May’s minority government and Brexit negotiations is likely to weigh on consumer confidence, denting UK house sales in the near term. There was a notable decline in new buyer enquiries following the General Election, which we expect to persist over the short term.“Whilst house price growth bounced back in June the figures still point to a slowing picture overall with annual house price growth now at just 3%. Going forward, recent political uncertainty from Theresa May’s minority government and Brexit negotiations is likely to weigh on consumer confidence, denting UK house sales in the near term. There was a notable decline in new buyer enquiries following the General Election, which we expect to persist over the short term.
“Over the medium-term the picture looks slightly rosier. Structural demand remains supportive given household formation rates and credit conditions remain supportive for house prices. The banks’ increased capital strength and ability to lend, alongside persistently low interest rates aiding home owners’ ability to service mortgages, should continue to support house price growth.“Over the medium-term the picture looks slightly rosier. Structural demand remains supportive given household formation rates and credit conditions remain supportive for house prices. The banks’ increased capital strength and ability to lend, alongside persistently low interest rates aiding home owners’ ability to service mortgages, should continue to support house price growth.
“We are forecasting 2-3% house price growth over the next 12 months.“We are forecasting 2-3% house price growth over the next 12 months.
This chart from Nationwide shows how London is now the second-slowest region for house price growth:This chart from Nationwide shows how London is now the second-slowest region for house price growth:
10.01am BST10.01am BST
10:0110:01
Watchdog gets its teeth into UK investment industryWatchdog gets its teeth into UK investment industry
In other news, Britain’s investment industry has been ordered to clean up its game and bring in radical reforms to help savers.In other news, Britain’s investment industry has been ordered to clean up its game and bring in radical reforms to help savers.
The City regulator, the FCA, is demanding that fund managers overhaul their charging structures and improve governance standards, to restore confidence in the sector and give customers a better deal.The City regulator, the FCA, is demanding that fund managers overhaul their charging structures and improve governance standards, to restore confidence in the sector and give customers a better deal.
My colleague Angela Monaghan explains:My colleague Angela Monaghan explains:
To improve competition, the regulator said companies should charge a single “all-in fee”, and make costs and charges more consistent and transparent for investors.To improve competition, the regulator said companies should charge a single “all-in fee”, and make costs and charges more consistent and transparent for investors.
Other measures included a requirement for fund managers to appoint a minimum of two independent directors to their boards.Other measures included a requirement for fund managers to appoint a minimum of two independent directors to their boards.
The FCA is also launching a separate investigation of investment platforms. That news hit Hargreaves Lansdown, the UK’s largest platform for investing in funds; its shares have fallen by 2.5% to the bottom of the FTSE 100 leaderboard this morning.The FCA is also launching a separate investigation of investment platforms. That news hit Hargreaves Lansdown, the UK’s largest platform for investing in funds; its shares have fallen by 2.5% to the bottom of the FTSE 100 leaderboard this morning.
Martin Gilbert, chief executive of Aberdeen Asset Management, has publicly backed the FSA, saying investors deserve better governance and transparent fees.Martin Gilbert, chief executive of Aberdeen Asset Management, has publicly backed the FSA, saying investors deserve better governance and transparent fees.
“I have stated several times that I am in favour of all-in fees including all costs as the industry has an obligation to deliver what the customer wants. Incorporating dealing charges for equity funds should be straightforward particularly for those managers, like ourselves, who have low portfolio turnover.“I have stated several times that I am in favour of all-in fees including all costs as the industry has an obligation to deliver what the customer wants. Incorporating dealing charges for equity funds should be straightforward particularly for those managers, like ourselves, who have low portfolio turnover.
It is more challenging to calculate all-in-fees for bond funds, but I’m encouraged the industry is already looking at ways of doing this. We need to embrace the concept and commit to finding a solution for the best interests of clients.It is more challenging to calculate all-in-fees for bond funds, but I’m encouraged the industry is already looking at ways of doing this. We need to embrace the concept and commit to finding a solution for the best interests of clients.
Here’s a more pithy reaction:Here’s a more pithy reaction:
"the FCA has hit the nuclear button" https://t.co/JzlBPgoX4N"the FCA has hit the nuclear button" https://t.co/JzlBPgoX4N
BREAKING: UK Fund Industry reacts to FCA Asset Management Report pic.twitter.com/0u0nFvbshiBREAKING: UK Fund Industry reacts to FCA Asset Management Report pic.twitter.com/0u0nFvbshi
UpdatedUpdated
at 10.17am BSTat 10.17am BST
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Hawks vs Doves at the Bank of EnglandHawks vs Doves at the Bank of England
The Bank of England’s next interest rate decision is scheduled for August 3rd.The Bank of England’s next interest rate decision is scheduled for August 3rd.
This will be an exciting vote, but I don’t think there’s enough support for an interest rate hike among the Monetary Policy Committee.This will be an exciting vote, but I don’t think there’s enough support for an interest rate hike among the Monetary Policy Committee.
As things stand, we can expect Ian McCafferty and Michael Saunders to vote for a quarter-point rate rise again (as they both did at June’s meeting)As things stand, we can expect Ian McCafferty and Michael Saunders to vote for a quarter-point rate rise again (as they both did at June’s meeting)
Andy Haldane, BoE chief economist, could also join them, following his hint last week that rates should rise later this year.Andy Haldane, BoE chief economist, could also join them, following his hint last week that rates should rise later this year.
But at least four MPC members are firmly in the no-change camp. Governor Mark Carney planted his flag there last week in his delayed Mansion House speech, and he’s now got Jon Cunliffe with him.But at least four MPC members are firmly in the no-change camp. Governor Mark Carney planted his flag there last week in his delayed Mansion House speech, and he’s now got Jon Cunliffe with him.
It’s also hard to see Ben Broadbent, the other deputy governor, defying Carney.It’s also hard to see Ben Broadbent, the other deputy governor, defying Carney.
Gertjan Vlieghe, the former hedge fund economist, is another likely dove (he’s argued that it’s better to tighten too late than too early).Gertjan Vlieghe, the former hedge fund economist, is another likely dove (he’s argued that it’s better to tighten too late than too early).
That leave the newest member of the MPC, economist Silvana Tenreyro, whose term starts in July. We don’t have many clues about her position.That leave the newest member of the MPC, economist Silvana Tenreyro, whose term starts in July. We don’t have many clues about her position.
One MPC seat is unfilled, following the untimely exit of Charlotte Hogg (she resigned after failing to declare that her brother worked for Barclays).One MPC seat is unfilled, following the untimely exit of Charlotte Hogg (she resigned after failing to declare that her brother worked for Barclays).
If Hogg hasn’t been replaced by August, then there could be a 4-4 split, giving Carney the casting vote.If Hogg hasn’t been replaced by August, then there could be a 4-4 split, giving Carney the casting vote.
UpdatedUpdated
at 9.41am BSTat 9.41am BST
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Sir Jon Cunliffe has “drawn the battle lines” for August’s monetary policy committee meeting by arguing against an early interest rate rise, says Bloomberg’s Lucy Meakin.Sir Jon Cunliffe has “drawn the battle lines” for August’s monetary policy committee meeting by arguing against an early interest rate rise, says Bloomberg’s Lucy Meakin.
Here’s a flavour of her piece:Here’s a flavour of her piece:
While some members of the BOE’s rate-setting committee have argued that consumer-price inflation of 2.9 percent means an increase in bank rate is required imminently, Cunliffe said that has been driven by the pound’s depreciation since the Brexit referendum and that wage pressures have remained low.While some members of the BOE’s rate-setting committee have argued that consumer-price inflation of 2.9 percent means an increase in bank rate is required imminently, Cunliffe said that has been driven by the pound’s depreciation since the Brexit referendum and that wage pressures have remained low.
Inflation above the 2 percent target is “not a comfortable place,” Cunliffe said in an interview on BBC radio. However, “we do have to look at what’s happening with domestic inflation pressures and on the data we have at the moment, that gives us a bit of time to see how this evolves.”Inflation above the 2 percent target is “not a comfortable place,” Cunliffe said in an interview on BBC radio. However, “we do have to look at what’s happening with domestic inflation pressures and on the data we have at the moment, that gives us a bit of time to see how this evolves.”
#BOE's Cunliffe says domestic price pressures buy time on rates https://t.co/OgPhIGSGEc via @lucy_meakin pic.twitter.com/L5VTmX9QZM#BOE's Cunliffe says domestic price pressures buy time on rates https://t.co/OgPhIGSGEc via @lucy_meakin pic.twitter.com/L5VTmX9QZM
8.33am BST8.33am BST
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London house price growth hits five-year lowLondon house price growth hits five-year low
London house price are now rising at the slowest rate since 2012, says Nationwide.London house price are now rising at the slowest rate since 2012, says Nationwide.
This chart shows how house prices in the UK capital have come off the boil, having outpaced the rest of the country for several years.This chart shows how house prices in the UK capital have come off the boil, having outpaced the rest of the country for several years.
London house prices barely rising, weakest annual growth since 2012 - Nationwide pic.twitter.com/yUQ4TMpTWDLondon house prices barely rising, weakest annual growth since 2012 - Nationwide pic.twitter.com/yUQ4TMpTWD
It’s a remarkable reversal, says Jonathan Hopper, managing director of Garrington Property Finders:It’s a remarkable reversal, says Jonathan Hopper, managing director of Garrington Property Finders:
“First came Britain’s electoral map, then its property map. June has seen them both redrawn.“First came Britain’s electoral map, then its property map. June has seen them both redrawn.
“For London’s house prices to be growing at the second slowest rate in the country would have been unthinkable for much of the past decade.“For London’s house prices to be growing at the second slowest rate in the country would have been unthinkable for much of the past decade.
“Instead growth is now spread much more evenly across the country, with the market fragmenting into a patchwork of smaller hotspots and coldspots.“Instead growth is now spread much more evenly across the country, with the market fragmenting into a patchwork of smaller hotspots and coldspots.
UpdatedUpdated
at 8.36am BSTat 8.36am BST
8.28am BST8.28am BST
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House prices rebound: What the experts sayHouse prices rebound: What the experts say
Jeremy Leaf, north London estate agent, agrees that the rebound in UK house prices in June is “a little surprising”.Jeremy Leaf, north London estate agent, agrees that the rebound in UK house prices in June is “a little surprising”.
He says that current low interest rates helped to push prices up by 1.1% last month, as did is a lack of supply:He says that current low interest rates helped to push prices up by 1.1% last month, as did is a lack of supply:
‘However, looking forward the shortage of supply and lack of housebuilding are certainly two of the factors supporting the market.‘However, looking forward the shortage of supply and lack of housebuilding are certainly two of the factors supporting the market.
These will need to improve if we are going to see more sustainable growth in housing transactions.These will need to improve if we are going to see more sustainable growth in housing transactions.
Neal Hudson of Residential Analysts points out that the housing market had a weak start to the year.Neal Hudson of Residential Analysts points out that the housing market had a weak start to the year.
Nationwide shows stronger house price growth in June after weak springMy current estimate for the change in house prices over 2017 is 1.9% pic.twitter.com/fyywsfrrqKNationwide shows stronger house price growth in June after weak springMy current estimate for the change in house prices over 2017 is 1.9% pic.twitter.com/fyywsfrrqK
Property advisor Pete Wargent agrees that low availability of housing stock is a key factory:Property advisor Pete Wargent agrees that low availability of housing stock is a key factory:
Odd-looking jump in UK house prices, with stock levels low; but other signals suggesting moderation (Nationwide) pic.twitter.com/gcyM26FQUpOdd-looking jump in UK house prices, with stock levels low; but other signals suggesting moderation (Nationwide) pic.twitter.com/gcyM26FQUp
Lucy Pendleton, Founder Director of independent estate agents James Pendleton, warns that the housing market faces four threats:Lucy Pendleton, Founder Director of independent estate agents James Pendleton, warns that the housing market faces four threats:
A gentle slide in prices could continue but it’s got less to do with Brexit and more to do with four factors that can be the Four Horsemen of the Apocalypse for markets - inflation, consumer credit, wage growth and mortgage activity - all of which have been dragging their heels recently.A gentle slide in prices could continue but it’s got less to do with Brexit and more to do with four factors that can be the Four Horsemen of the Apocalypse for markets - inflation, consumer credit, wage growth and mortgage activity - all of which have been dragging their heels recently.
“In May, mortgage approvals hit an eight-month low, wage growth slumped, inflation rose unexpectedly to 2.9%, a near four-year high, and consumer credit also fell dramatically.“In May, mortgage approvals hit an eight-month low, wage growth slumped, inflation rose unexpectedly to 2.9%, a near four-year high, and consumer credit also fell dramatically.
“This combination of factors is not fertile soil for house price growth. What I expect to see from those buyers and sellers who don’t have to come to market right away, is the classic wait-and-see wobble as vendors put off selling, and buyers hold out for better deals.“This combination of factors is not fertile soil for house price growth. What I expect to see from those buyers and sellers who don’t have to come to market right away, is the classic wait-and-see wobble as vendors put off selling, and buyers hold out for better deals.
“It’s this wait-and-see approach that can cause short-term falls to become a bit of a self-fulfilling prophecy but solid demand, particularly in urban areas, will cushion any retreat in prices.”“It’s this wait-and-see approach that can cause short-term falls to become a bit of a self-fulfilling prophecy but solid demand, particularly in urban areas, will cushion any retreat in prices.”
8.24am BST8.24am BST
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Besides the key news headlines that you’d expect, there’s an at-a-glance agenda of the day’s main events, insightful opinion pieces and a quality feature to sink your teeth into each day.Besides the key news headlines that you’d expect, there’s an at-a-glance agenda of the day’s main events, insightful opinion pieces and a quality feature to sink your teeth into each day.
For your morning shot of financial news, sign up here:For your morning shot of financial news, sign up here:
8.09am BST8.09am BST
08:0908:09
UK house prices rebound in JuneUK house prices rebound in June
Now here’s a surprise.... UK house prices have rebounded quite strongly this month, despite a slowdown in London.Now here’s a surprise.... UK house prices have rebounded quite strongly this month, despite a slowdown in London.
Prices rose by 1.1% in June, according to the latest figures from Nationwide, reversing three months of falls. That means the average house costs 3.1% more than a year ago, at £211,301.Prices rose by 1.1% in June, according to the latest figures from Nationwide, reversing three months of falls. That means the average house costs 3.1% more than a year ago, at £211,301.
But Robert Gardner, Nationwide’s Chief Economist, remains caution, saying:But Robert Gardner, Nationwide’s Chief Economist, remains caution, saying:
“The annual rate of house price growth, which gives a better sense of the underlying trend, continues to point to modest price gains. Annual house price growth edged up to 3.1% from 2.1% in May.“The annual rate of house price growth, which gives a better sense of the underlying trend, continues to point to modest price gains. Annual house price growth edged up to 3.1% from 2.1% in May.
In effect, after two sluggish months, annual price growth has returned to the 3-6% range that had been prevailing since early 2015.In effect, after two sluggish months, annual price growth has returned to the 3-6% range that had been prevailing since early 2015.
The figures also show some interesting changes at the regional level. In London, prices have only risen by 1.2% in the last year, while East Anglia has enjoyed 5% house price inflation.The figures also show some interesting changes at the regional level. In London, prices have only risen by 1.2% in the last year, while East Anglia has enjoyed 5% house price inflation.
8.00am BST8.00am BST
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Jon Cunliffe also admitted that the recent surge in inflation, to 2.9%, means the Bank of England isn’t in a “comfortable place” right now.Jon Cunliffe also admitted that the recent surge in inflation, to 2.9%, means the Bank of England isn’t in a “comfortable place” right now.
Bank of England Cunliffe says the MPC is not "in a comfortable place" as civil war rages on the MPC with a clear split in opinions forming. pic.twitter.com/O5IB7UO1WLBank of England Cunliffe says the MPC is not "in a comfortable place" as civil war rages on the MPC with a clear split in opinions forming. pic.twitter.com/O5IB7UO1WL
7.56am BST7.56am BST
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Cunliffe: Now's not the time to raise ratesCunliffe: Now's not the time to raise rates
The split at the Bank of England over when to raise interest rates has widened further this morning, after deputy governor Sir Jon Cunliffe waded in.The split at the Bank of England over when to raise interest rates has widened further this morning, after deputy governor Sir Jon Cunliffe waded in.
Cunliffe has come down firmly in the ‘don’t raise rates yet’ camp, arguing that there’s simply not enough pressure to justify a rate rise.Cunliffe has come down firmly in the ‘don’t raise rates yet’ camp, arguing that there’s simply not enough pressure to justify a rate rise.
With households facing a wage squeeze, Cunliffe argues that inflicting higher borrowing costs would just make the situation worse.With households facing a wage squeeze, Cunliffe argues that inflicting higher borrowing costs would just make the situation worse.
This puts Cunliffe in opposition to at least two other policymakers, and means he’s firmly behind his boss, governor Mark Carney.This puts Cunliffe in opposition to at least two other policymakers, and means he’s firmly behind his boss, governor Mark Carney.
Cunliffe told BBC Radio that:Cunliffe told BBC Radio that:
“[Consumer spending] is slowing as households’ real incomes are squeezed by higher inflation, we expect some of that slowing to be offset by growth in business investment, growth in exports. And I want to see how that plays out.“[Consumer spending] is slowing as households’ real incomes are squeezed by higher inflation, we expect some of that slowing to be offset by growth in business investment, growth in exports. And I want to see how that plays out.
(We) do have to look at what’s happening to domestic inflation pressure, and I think that on the data we have at the moment, gives us a bit of time to see how this evolves.”(We) do have to look at what’s happening to domestic inflation pressure, and I think that on the data we have at the moment, gives us a bit of time to see how this evolves.”
All sensible-sounding stuff.All sensible-sounding stuff.
But just a week ago, chief economist Andy Haldane shocked the markets by revealing that he expects to vote for a rate hike later this year..... Two other policymakers, Ian McCafferty and Michael Saunders, voted to raise rates in June (along with the departing Kristin Forbes).But just a week ago, chief economist Andy Haldane shocked the markets by revealing that he expects to vote for a rate hike later this year..... Two other policymakers, Ian McCafferty and Michael Saunders, voted to raise rates in June (along with the departing Kristin Forbes).
So the next meeting, in August, could be a real humdinger as the hawks and doves trade blows over the state of the UK economy, the inflation threat, and the risks posed by Brexit.So the next meeting, in August, could be a real humdinger as the hawks and doves trade blows over the state of the UK economy, the inflation threat, and the risks posed by Brexit.
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at 7.58am BSTat 7.58am BST
7.30am BST7.30am BST
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The agenda: Central bankers in the spotlight againThe agenda: Central bankers in the spotlight again
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Central bankers are commanding our attention again today. Last night, Federal Reserve chair Janet Yellen gave a rare hostage to fortune by predicting that we’ll probably live out our days without seeing a repeat of the 2008 crisis.Central bankers are commanding our attention again today. Last night, Federal Reserve chair Janet Yellen gave a rare hostage to fortune by predicting that we’ll probably live out our days without seeing a repeat of the 2008 crisis.
Yellen told an audience in London that:Yellen told an audience in London that:
“Would I say there will never, ever be another financial crisis?“Would I say there will never, ever be another financial crisis?
“You know probably that would be going too far but I do think we’re much safer and I hope that it will not be in our lifetimes and I don’t believe it will be.”“You know probably that would be going too far but I do think we’re much safer and I hope that it will not be in our lifetimes and I don’t believe it will be.”
Fed's Yellen expects no new financial crisis in 'our lifetimes' https://t.co/Jj1uL7sNVM pic.twitter.com/IRKVn2IedKFed's Yellen expects no new financial crisis in 'our lifetimes' https://t.co/Jj1uL7sNVM pic.twitter.com/IRKVn2IedK
But do other central bankers agree? We may find out later today, as the European Central Bank holds its annual Forum in Portugal’s Sintra.But do other central bankers agree? We may find out later today, as the European Central Bank holds its annual Forum in Portugal’s Sintra.
Many of the top stars of monetary policy are attending, including ECB president Mario Draghi, the Bank of England’s Mark Carney, Japan’s Haruhiko Kuroda and Stephen Poloz of the Bank of Canada.Many of the top stars of monetary policy are attending, including ECB president Mario Draghi, the Bank of England’s Mark Carney, Japan’s Haruhiko Kuroda and Stephen Poloz of the Bank of Canada.
Yesterday, the Bank of England ordered UK banks to hold more capital in case of a consumer debt crisis. Today, we find out how British house prices are holding up in the face of Brexit uncertainty.Yesterday, the Bank of England ordered UK banks to hold more capital in case of a consumer debt crisis. Today, we find out how British house prices are holding up in the face of Brexit uncertainty.
We’re also getting new US trade figures.We’re also getting new US trade figures.
On the corporate front, electricals retailer Dixons Carphone and packaging giant Bunzl are reporting financial results.On the corporate front, electricals retailer Dixons Carphone and packaging giant Bunzl are reporting financial results.
And Britain’s financial watchdog, the FCA, is releasing a report into UK fund management industry. We’ll dig through the key points.And Britain’s financial watchdog, the FCA, is releasing a report into UK fund management industry. We’ll dig through the key points.
The agenda:The agenda:
7am BST: Nationwide house prices (details to come shortly!)7am BST: Nationwide house prices (details to come shortly!)
1.30pm BST: US trade figures for May1.30pm BST: US trade figures for May
2.30pm: BST: Central bank chiefs panel with Mark Carney, Mario Draghi, Haruhiko Kuroda and Stephen Poloz in Sintra2.30pm: BST: Central bank chiefs panel with Mark Carney, Mario Draghi, Haruhiko Kuroda and Stephen Poloz in Sintra
UpdatedUpdated
at 7.58am BSTat 7.58am BST