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You can find the current article at its original source at https://www.theguardian.com/business/live/2017/oct/17/uk-inflation-wage-squeeze-mark-carney-bank-of-england-live
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| Bank of England's Mark Carney says inflation hasn't peaked yet after hitting 3% today - business live | Bank of England's Mark Carney says inflation hasn't peaked yet after hitting 3% today - business live |
| (35 minutes later) | |
| 4.41pm BST | |
| 16:41 | |
| The Dow above 23,000 was short-lived, for the moment at least. It is still up, but just 0.08% at 22,976. | |
| Dow 23,000, we hardly knew ye. #sarcasm | |
| 4.19pm BST | 4.19pm BST |
| 16:19 | 16:19 |
| Commenting on the day’s rising stock markets, Joshua Mahony, market analyst at IG, said: | Commenting on the day’s rising stock markets, Joshua Mahony, market analyst at IG, said: |
| Global stocks have enjoyed another day of gains, with the now customary record highs in US indices this time driven by an outperformance in the banking sector. The dollar strengthened, with European currencies losing ground amid uncertainty fueled by Catalonia and Brexit. With the yen and gold losing ground, there is a clear shift into risk assets to the detriment of perceived havens. | Global stocks have enjoyed another day of gains, with the now customary record highs in US indices this time driven by an outperformance in the banking sector. The dollar strengthened, with European currencies losing ground amid uncertainty fueled by Catalonia and Brexit. With the yen and gold losing ground, there is a clear shift into risk assets to the detriment of perceived havens. |
| The latest US earnings season is underway, and US financials are heading higher in the wake of impressive figures from Goldman Sachs and Morgan Stanley. ..the impressive overall profitability in US banking does help instill confidence in an environment of rising rates. | The latest US earnings season is underway, and US financials are heading higher in the wake of impressive figures from Goldman Sachs and Morgan Stanley. ..the impressive overall profitability in US banking does help instill confidence in an environment of rising rates. |
| 4.16pm BST | 4.16pm BST |
| 16:16 | 16:16 |
| Dow crosses 23,000 | Dow crosses 23,000 |
| The Dow Jones Industrial Average has crossed 23,000 for the first time, as the surge in stock markets continues. The move comes not long after it breached the 22,000 barrier on 2 August. | The Dow Jones Industrial Average has crossed 23,000 for the first time, as the surge in stock markets continues. The move comes not long after it breached the 22,000 barrier on 2 August. |
| And I just got my shipment of Dow 22k hats, too... | And I just got my shipment of Dow 22k hats, too... |
| 3.52pm BST | 3.52pm BST |
| 15:52 | 15:52 |
| The comments from the Bank of England outweighed strong inflation figures as far as the pound is concerned, says Connor Campbell, financial analyst at Spreadex: | The comments from the Bank of England outweighed strong inflation figures as far as the pound is concerned, says Connor Campbell, financial analyst at Spreadex: |
| Rate hike uncertainty spoiled what could have been an incredibly hawkish day for the pound, given that inflation hit a 5 year high of 3.0% in September. | Rate hike uncertainty spoiled what could have been an incredibly hawkish day for the pound, given that inflation hit a 5 year high of 3.0% in September. |
| The Bank of England ended up distracting sterling from that alarmingly high CPI reading. New deputy governor Dave Ramsden was pretty dovish this morning, and while his MPC peer Silvana Tenreyro was slightly more open to a rate hike, she said any move is ‘very contingent on the data’ (which, at the moment, isn’t a great sign for sterling). | The Bank of England ended up distracting sterling from that alarmingly high CPI reading. New deputy governor Dave Ramsden was pretty dovish this morning, and while his MPC peer Silvana Tenreyro was slightly more open to a rate hike, she said any move is ‘very contingent on the data’ (which, at the moment, isn’t a great sign for sterling). |
| BoE chief Mark Carney arguably dealt the biggest blow to the pound. Though the central bank head honcho said the MPC thinks a hike may be appropriate ‘in the coming months’, that comment potentially pushes the pulling of the interest rate trigger beyond the Bank of England’s next meeting in early November. | BoE chief Mark Carney arguably dealt the biggest blow to the pound. Though the central bank head honcho said the MPC thinks a hike may be appropriate ‘in the coming months’, that comment potentially pushes the pulling of the interest rate trigger beyond the Bank of England’s next meeting in early November. |
| That wasn’t all. Carney warned on the negative impact a ‘no deal’ Brexit would have on the economy, while stating that businesses are ‘less confident about a smooth transition’. The OECD also got involved, claiming a ‘disorderly’ Brexit would reduce Britain’s ‘long-term growth’. | That wasn’t all. Carney warned on the negative impact a ‘no deal’ Brexit would have on the economy, while stating that businesses are ‘less confident about a smooth transition’. The OECD also got involved, claiming a ‘disorderly’ Brexit would reduce Britain’s ‘long-term growth’. |
| Combine that with the prospect of some miserable wage growth and retail sales figures on Wednesday and Thursday respectively, and some decent import prices and industrial production data from the US, and cable had a truly dreadful afternoon. The pound fell 0.7% against the dollar, sending it back towards $1.31; sterling fared a bit better against the euro, and even then it slipped 0.3%. The FTSE couldn’t squeeze too much growth out of this situation, with the UK index still stuck below 7550, a level its struggled to break for the past week. | Combine that with the prospect of some miserable wage growth and retail sales figures on Wednesday and Thursday respectively, and some decent import prices and industrial production data from the US, and cable had a truly dreadful afternoon. The pound fell 0.7% against the dollar, sending it back towards $1.31; sterling fared a bit better against the euro, and even then it slipped 0.3%. The FTSE couldn’t squeeze too much growth out of this situation, with the UK index still stuck below 7550, a level its struggled to break for the past week. |
| 3.39pm BST | 3.39pm BST |
| 15:39 | 15:39 |
| Here’s a chart from ING Bank showing UK inflation excluding the movements in the pound and oil price: | Here’s a chart from ING Bank showing UK inflation excluding the movements in the pound and oil price: |
| Important #UK chart - stripping out the impact of £'s fall and oil price effect, #inflation would be below 2%. Few signs of domestic price pressures based on this measure.... $GBP pic.twitter.com/kJL0du1AKL | Important #UK chart - stripping out the impact of £'s fall and oil price effect, #inflation would be below 2%. Few signs of domestic price pressures based on this measure.... $GBP pic.twitter.com/kJL0du1AKL |
| 3.28pm BST | 3.28pm BST |
| 15:28 | 15:28 |
| Back with the pound: | Back with the pound: |
| £ drops on failure of Carney to commit to hike (said might be appropriate in coming months). It will plummet if BoE holds steady in November https://t.co/DzfDhLolnb | £ drops on failure of Carney to commit to hike (said might be appropriate in coming months). It will plummet if BoE holds steady in November https://t.co/DzfDhLolnb |
| 2.51pm BST | 2.51pm BST |
| 14:51 | 14:51 |
| The outlook for US manufacturing looks upbeat even if the recent hurricanes have a negative effect on the short term figures, reckons James Knightley, chief international economist at ING Bank. Following the industrial production figures, he said: | The outlook for US manufacturing looks upbeat even if the recent hurricanes have a negative effect on the short term figures, reckons James Knightley, chief international economist at ING Bank. Following the industrial production figures, he said: |
| US Industrial production rose 0.3% month on month, in line with expectations. A two-tenths upward revision to August was also announced (-0.7% versus -0.9% originally reported). | US Industrial production rose 0.3% month on month, in line with expectations. A two-tenths upward revision to August was also announced (-0.7% versus -0.9% originally reported). |
| The details show that manufacturing output rose 0.1% month on month, utilities grew 1.5% month on month while mining was up 0.4% month on month. The Federal Reserve had suggested in advance of the report’s publication that the data would be liable to revision given a lack of information on which operations were back up and running after Hurricane Harvey while Hurricane Irma will have had a depressing effect on figures from Florida. | The details show that manufacturing output rose 0.1% month on month, utilities grew 1.5% month on month while mining was up 0.4% month on month. The Federal Reserve had suggested in advance of the report’s publication that the data would be liable to revision given a lack of information on which operations were back up and running after Hurricane Harvey while Hurricane Irma will have had a depressing effect on figures from Florida. |
| Nonetheless, the outlook remains positive with manufacturing set to strengthen in coming months. The domestic story is encouraging with the ISM manufacturing headline figure at a 13 year high while the softer dollar (relative to last year) and strengthening foreign demand should support exports. Meanwhile, mining output should gradually move higher given rising oil prices and rig counts. Consequently, we look for the sector to make a meaningful contribution to fourth quarter GDP even if it has disappointed in third quarter through the hit from the storms. | Nonetheless, the outlook remains positive with manufacturing set to strengthen in coming months. The domestic story is encouraging with the ISM manufacturing headline figure at a 13 year high while the softer dollar (relative to last year) and strengthening foreign demand should support exports. Meanwhile, mining output should gradually move higher given rising oil prices and rig counts. Consequently, we look for the sector to make a meaningful contribution to fourth quarter GDP even if it has disappointed in third quarter through the hit from the storms. |
| 2.47pm BST | 2.47pm BST |
| 14:47 | 14:47 |
| Over in the US, industrial production for September has edged up in line with forecasts. | Over in the US, industrial production for September has edged up in line with forecasts. |
| It rose 0.3% compared to a decline of 0.7% in August, itself revised up from an initial 0.9% fall. | It rose 0.3% compared to a decline of 0.7% in August, itself revised up from an initial 0.9% fall. |
| #UnitedStates Industrial Production month-on-month at 0.3% https://t.co/d2vCgluAuV pic.twitter.com/hMBHGW6Noq | #UnitedStates Industrial Production month-on-month at 0.3% https://t.co/d2vCgluAuV pic.twitter.com/hMBHGW6Noq |
| On Wall Street, the Dow Jones Industrial Average has added around 15 points or 0.07% in early trading to a new record high. The S&P 500 slipped 0.5 points at the open, while the Nasdaq Composite dipped 3.44 points. The uncertain start came despite reasonable results from investment banking giants Goldman Sachs and Morgan Stanley. | On Wall Street, the Dow Jones Industrial Average has added around 15 points or 0.07% in early trading to a new record high. The S&P 500 slipped 0.5 points at the open, while the Nasdaq Composite dipped 3.44 points. The uncertain start came despite reasonable results from investment banking giants Goldman Sachs and Morgan Stanley. |
| Updated | Updated |
| at 3.08pm BST | at 3.08pm BST |
| 2.38pm BST | 2.38pm BST |
| 14:38 | 14:38 |
| The pound is down around 0.5%, partly on the downbeat Brexit comments from the OECD and Bank of England governor Mark Carney. It has also been affected by Carney saying interest rates would rise in the months ahead, which was taken to mean not necessarily in November as expected, as well as dovish remarks from other members of the Bank’s monetary policy committee. | The pound is down around 0.5%, partly on the downbeat Brexit comments from the OECD and Bank of England governor Mark Carney. It has also been affected by Carney saying interest rates would rise in the months ahead, which was taken to mean not necessarily in November as expected, as well as dovish remarks from other members of the Bank’s monetary policy committee. |
| The fall in sterling has given a lift to the FTSE 100, which has a large number of exporters who benefit from a weaker pound. The leading index is currently up 20 points or 0.28%. | The fall in sterling has given a lift to the FTSE 100, which has a large number of exporters who benefit from a weaker pound. The leading index is currently up 20 points or 0.28%. |
| Updated | Updated |
| at 2.39pm BST | at 2.39pm BST |
| 2.28pm BST | 2.28pm BST |
| 14:28 | 14:28 |
| Early afternoon summary | Early afternoon summary |
| Time for a quick recap. | Time for a quick recap. |
| Britain’s inflation rate has hit a new five-year high, taking another bite out of wages and bringing more pain for those relying on government benefits. | Britain’s inflation rate has hit a new five-year high, taking another bite out of wages and bringing more pain for those relying on government benefits. |
| The Consumer Prices Index rose by 3.0% in the 12 months to September, the highest level since early 2012. Food and transport costs were important factors behind the rise, which economists are blaming on the weak pound driving up import costs. | The Consumer Prices Index rose by 3.0% in the 12 months to September, the highest level since early 2012. Food and transport costs were important factors behind the rise, which economists are blaming on the weak pound driving up import costs. |
| The figures mean that the state pension is on track to rise by 3% next year, under the ‘triple-lock’ policy. | The figures mean that the state pension is on track to rise by 3% next year, under the ‘triple-lock’ policy. |
| It also means that real wages have continued to fall -- average earnings only rose by 2.1% in the three months to July; new labour market figures due tomorrow are unlikely to show much improvement. | It also means that real wages have continued to fall -- average earnings only rose by 2.1% in the three months to July; new labour market figures due tomorrow are unlikely to show much improvement. |
| Here's what contributed to the rise in CPI inflation: transport, food and recreation/culture costs pic.twitter.com/nwXGjEajAN | Here's what contributed to the rise in CPI inflation: transport, food and recreation/culture costs pic.twitter.com/nwXGjEajAN |
| Bank of England governor Mark Carney predicted that inflation will probably rise higher in the next couple of months, before dipping back. | Bank of England governor Mark Carney predicted that inflation will probably rise higher in the next couple of months, before dipping back. |
| Testifying to the Treasury committee, Carney warned that European states have not done as much work as the UK on the possibility of Britain leaving the EU without a deal. | Testifying to the Treasury committee, Carney warned that European states have not done as much work as the UK on the possibility of Britain leaving the EU without a deal. |
| He also told MPs that firms are losing confidence that Brexit will proceed smoothly to a new trading arrangement. | He also told MPs that firms are losing confidence that Brexit will proceed smoothly to a new trading arrangement. |
| Carney also argued forcefully that a transition period, of at least two years, would help resolve issues such as Britain’s massive derivatives market. | Carney also argued forcefully that a transition period, of at least two years, would help resolve issues such as Britain’s massive derivatives market. |
| #BOE's Carney makes financial case for a strong #Brexit transition deal https://t.co/P8uszQeYMo via @JohnEGlover pic.twitter.com/VW4WDtUWbP | #BOE's Carney makes financial case for a strong #Brexit transition deal https://t.co/P8uszQeYMo via @JohnEGlover pic.twitter.com/VW4WDtUWbP |
| The rise in inflation could spur the Bank of England to raise interest rates next month. But some City experts warn that this would harm the economy, and do little to bring down import prices. | The rise in inflation could spur the Bank of England to raise interest rates next month. But some City experts warn that this would harm the economy, and do little to bring down import prices. |
| Lukman Otunuga, Research Analyst at FXTM, says Mark Carney et al have a difficult decision: | Lukman Otunuga, Research Analyst at FXTM, says Mark Carney et al have a difficult decision: |
| This has been a tricky year for the central bank, especially when considering how elevated inflation levels have squeezed household spending - impacting the outlook for the economy. With inflation leaving average earnings in the dust, consumers are feeling the pinch and as such, it threatens the sustainability of Britain’s consumer-driven growth. | This has been a tricky year for the central bank, especially when considering how elevated inflation levels have squeezed household spending - impacting the outlook for the economy. With inflation leaving average earnings in the dust, consumers are feeling the pinch and as such, it threatens the sustainability of Britain’s consumer-driven growth. |
| While the argument for higher rates is to put a lid on inflation, this may end up punishing the fragile UK economy. | While the argument for higher rates is to put a lid on inflation, this may end up punishing the fragile UK economy. |
| Union leaders have urged the government to raise public sector wages, which would help nurses, teachers, police officers et al to handle inflation. | Union leaders have urged the government to raise public sector wages, which would help nurses, teachers, police officers et al to handle inflation. |
| Liberal Democrat Leader Vince Cable agrees, saying: | Liberal Democrat Leader Vince Cable agrees, saying: |
| “The Brexit squeeze caused by the falling pound is getting worse, and it is hitting the poorest families hardest. | “The Brexit squeeze caused by the falling pound is getting worse, and it is hitting the poorest families hardest. |
| “This above-target inflation is increasing the cost of the weekly shop and cutting into people’s living standards. | “This above-target inflation is increasing the cost of the weekly shop and cutting into people’s living standards. |
| “The Chancellor must end the benefits freeze that is set to leave millions of families hundreds of pounds poorer a year. | “The Chancellor must end the benefits freeze that is set to leave millions of families hundreds of pounds poorer a year. |
| Above all, the government must change course from a destructive Brexit that would damage living standards and push up prices further.” | Above all, the government must change course from a destructive Brexit that would damage living standards and push up prices further.” |
| Updated | Updated |
| at 2.54pm BST | at 2.54pm BST |
| 1.58pm BST | 1.58pm BST |
| 13:58 | 13:58 |
| Here’s a clip of Mark Carney today, warning that inflation will probably rise further in October or November: | Here’s a clip of Mark Carney today, warning that inflation will probably rise further in October or November: |
| "Inflation will peak" in next couple of months - Bank of England Governor Mark Carney tells @CommonsTreasury https://t.co/8I5mA6Udpu pic.twitter.com/GzZ8C6xciv | "Inflation will peak" in next couple of months - Bank of England Governor Mark Carney tells @CommonsTreasury https://t.co/8I5mA6Udpu pic.twitter.com/GzZ8C6xciv |
| 1.29pm BST | 1.29pm BST |
| 13:29 | 13:29 |
| Carney: Bank of England is trying to tackle its gender pay gap | Carney: Bank of England is trying to tackle its gender pay gap |
| And finally, governor Carney is asked about the Bank of England’s gender pay gap. | And finally, governor Carney is asked about the Bank of England’s gender pay gap. |
| He says Bank is planning to publish details next month. But he’s happy to give some top lines now. Namely... | He says Bank is planning to publish details next month. But he’s happy to give some top lines now. Namely... |
| The median gender pay gap is 24% | The median gender pay gap is 24% |
| The mean pay gap is 21%. | The mean pay gap is 21%. |
| But, on an equal work for equal pay assessment, there is no gender pay gap. | But, on an equal work for equal pay assessment, there is no gender pay gap. |
| The gaps exists because there are more men at the top of the Bank than lower down the ranks, who are paid more. | The gaps exists because there are more men at the top of the Bank than lower down the ranks, who are paid more. |
| Carney insists the Bank is committed to improving diversity. He cites ‘blind’ recruitment panels, spreading the recruitment net beyond economists, hiring from 40 universities (up from just 10). | Carney insists the Bank is committed to improving diversity. He cites ‘blind’ recruitment panels, spreading the recruitment net beyond economists, hiring from 40 universities (up from just 10). |
| If you start from a position of being almost exclusively a white male institution, you need to have a deliberate strategy of movement. | If you start from a position of being almost exclusively a white male institution, you need to have a deliberate strategy of movement. |
| In the end, the Bank expects to be in the “middle of the pack” for the financial services industry on gender, but near the top for the public sector. | In the end, the Bank expects to be in the “middle of the pack” for the financial services industry on gender, but near the top for the public sector. |
| And that’s the end of the session. | And that’s the end of the session. |
| Carney is over after a question on gender pay gap. The median gap is 24% and the mean is 21%. No gap on equal pay for equal work terms. | Carney is over after a question on gender pay gap. The median gap is 24% and the mean is 21%. No gap on equal pay for equal work terms. |
| Updated | Updated |
| at 1.31pm BST | at 1.31pm BST |
| 1.15pm BST | 1.15pm BST |
| 13:15 | 13:15 |
| Back in the Thatcher Room, Mark Carney is invited to dwell on the benefits of Brexit.... | Back in the Thatcher Room, Mark Carney is invited to dwell on the benefits of Brexit.... |
| The governor cited a few, including: | The governor cited a few, including: |
| But, Parliament will have to decide the balance of those opportunities versus striking a transition deal and a new arrangement with the EU. | But, Parliament will have to decide the balance of those opportunities versus striking a transition deal and a new arrangement with the EU. |
| 1.05pm BST | 1.05pm BST |
| 13:05 | 13:05 |
| Carney denies that the Bank’s quantitative easing programme, which has bought £425bn of bonds with newly created money, is the monetary equivalent of heroin. | Carney denies that the Bank’s quantitative easing programme, which has bought £425bn of bonds with newly created money, is the monetary equivalent of heroin. |
| Carney asked if @nickmacpherson2 is right and QE is like heroinAnswer: We're clean. Not addicted and not about to go through withdrawal | Carney asked if @nickmacpherson2 is right and QE is like heroinAnswer: We're clean. Not addicted and not about to go through withdrawal |