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Bank of England gives mixed signals on rate rise - business live Bank of England gives mixed signals on rate rise, Trump slams Opec on oil prices - live
(35 minutes later)
Oil producers meeting in Jeddah have hit back after Donald Trump said they were keeping crude prices “artificially high”. Reuters reports:
OPEC Secretary General Mohammed Barkindo said the pact between OPEC and non-OPEC countries to cut production had halted the collapse in global oil prices, and said the group was a friend of the United States with an interest in its prosperity.
Output cuts “not only arrested the decline but rescued the oil industry from imminent collapse and is now on course to restore stability on a sustainable basis in the interest of producers, consumers and the global economy,” Barkindo said.
Energy ministers from the United Arab Emirates and Iraq, two OPEC members, also rejected the notion that prices were too high.
The bid saga surrounding pharmaceuticals group Shire continues, with Japanese predator Takeda announcing an increase in its offer.
The terms are improved from £46.50 to £47 a share, comprising £21 in cash and £26 of new Takeda shares. The new offer values Shire at around £43bn.
Nissan is planning to cut hundreds of jobs at its Sunderland factory in response to the sharp fall in demand for diesel cars.
The Japanese car manufacturer makes its Qashqai and Juke models at the plant, and said it was talking to workers about the changes.
We will be managing a planned short-term reduction in powertrain supply and plant volumes.
It’s been a volatile day for the pound against the dollar.
Sterling is currently down 0.5% at $1.4019, weighed down by Mark Carney’s comments last night in which he suggested a May rate is not a done deal.
The pound is faring better against the euro, up 0.1% at €1.1419.
Here’s how it looked when the opening bell rang on Wall Street:Here’s how it looked when the opening bell rang on Wall Street:
Dow Jones: +0.04% at 24,676Dow Jones: +0.04% at 24,676
S&P 500: +0.02% at 2,694S&P 500: +0.02% at 2,694
Nasdaq: -0.2% at 7,223Nasdaq: -0.2% at 7,223
The FTSE 100 is up 50 points or 0.3% but not all of the UK’s biggest listed firms are having a good day.The FTSE 100 is up 50 points or 0.3% but not all of the UK’s biggest listed firms are having a good day.
Shares in consumer giant Reckitt Benckiser are down 3.9%, while drugmaker Shire is down 4.3% after Allergan pulled the plug on a potential takeover bid.Shares in consumer giant Reckitt Benckiser are down 3.9%, while drugmaker Shire is down 4.3% after Allergan pulled the plug on a potential takeover bid.
Here’s how it looks at the bottom of the table:Here’s how it looks at the bottom of the table:
Andrew Goodwin, lead economist at Oxford Economics, says Mark Carney’s comments last night are a “game changer” and suggest the next rate rise could be put off until June or August:Andrew Goodwin, lead economist at Oxford Economics, says Mark Carney’s comments last night are a “game changer” and suggest the next rate rise could be put off until June or August:
Mark Carney’s BBC interview on Thursday night threatens to be a game changer in terms of May’s Monetary Policy Committee meeting.Mark Carney’s BBC interview on Thursday night threatens to be a game changer in terms of May’s Monetary Policy Committee meeting.
The MPC had consistently talked up the chances of a May hike, despite a lengthy run of soft economic data, but the Governor gave a clear sign that the Committee is wavering.The MPC had consistently talked up the chances of a May hike, despite a lengthy run of soft economic data, but the Governor gave a clear sign that the Committee is wavering.
There is now a very real chance of the next hike being postponed to June, or even August. But more important than the exact timing of the next move is the degree to which a more rapid slowdown in inflation and weak momentum behind wage growth could undermine the MPC’s case for subsequent hikes.There is now a very real chance of the next hike being postponed to June, or even August. But more important than the exact timing of the next move is the degree to which a more rapid slowdown in inflation and weak momentum behind wage growth could undermine the MPC’s case for subsequent hikes.
Time for another look at the markets across Europe, where the FTSE is still ahead of the pack:Time for another look at the markets across Europe, where the FTSE is still ahead of the pack:
FTSE 100: +0.3% at 7,354FTSE 100: +0.3% at 7,354
Germany’s DAX: -0.2% at 12,539Germany’s DAX: -0.2% at 12,539
France’s CAC: +0.2% at 5,403France’s CAC: +0.2% at 5,403
Italy’s FTSE MIB: +0.2% at 23,833Italy’s FTSE MIB: +0.2% at 23,833
Spain’s IBEX: +0.1% at 9,879Spain’s IBEX: +0.1% at 9,879
Europe’s STOXX 600: -0.2% at 381Europe’s STOXX 600: -0.2% at 381
The UK economy is not the only item on the agenda over at the IMF’s spring meetings in Washington. Helena Smith reports from Athens.The UK economy is not the only item on the agenda over at the IMF’s spring meetings in Washington. Helena Smith reports from Athens.
After almost a decade of economic crisis and the biggest bailout in global financial history, Greece will be in the spotlight today when international creditors meet in Washington to discuss a debt relief plan for the country.After almost a decade of economic crisis and the biggest bailout in global financial history, Greece will be in the spotlight today when international creditors meet in Washington to discuss a debt relief plan for the country.
After receiving an estimated €260bn under three successive bailouts, international creditors say the time has come to put Greek finances on a sustainable footing. In what some are calling a day of reckoning for the hugely indebted state, the International Monetary Fund, European Central Bank heads and finance ministers of the strongest eurozone member states will begin drafting a debt relief plan for the country.After receiving an estimated €260bn under three successive bailouts, international creditors say the time has come to put Greek finances on a sustainable footing. In what some are calling a day of reckoning for the hugely indebted state, the International Monetary Fund, European Central Bank heads and finance ministers of the strongest eurozone member states will begin drafting a debt relief plan for the country.
The discussion by members of the so-called Washington Group is expected to be instrumental in facilitating Greece’s ability to stand on its own feet again when its current – and last – bailout programme officially expires this August.The discussion by members of the so-called Washington Group is expected to be instrumental in facilitating Greece’s ability to stand on its own feet again when its current – and last – bailout programme officially expires this August.
The Greek finance minister Euclid Tsakalotos, who is also in the US capital, will not attend the meeting. Officials in Athens said it was hoped today’s meeting could pave the way for eurozone finance ministers to make concrete decisions when they meet in Bulgaria - the current holder of the EU presidency - next week.The Greek finance minister Euclid Tsakalotos, who is also in the US capital, will not attend the meeting. Officials in Athens said it was hoped today’s meeting could pave the way for eurozone finance ministers to make concrete decisions when they meet in Bulgaria - the current holder of the EU presidency - next week.
At 180% of GDP, Greece has the highest debt load in the EU. Among the options the Washington Group will likely discuss are support measures to ease the huge cost of servicing Athens’ debt pile.At 180% of GDP, Greece has the highest debt load in the EU. Among the options the Washington Group will likely discuss are support measures to ease the huge cost of servicing Athens’ debt pile.
If there is some discrepancy in the Bank of England’s view of the economy - Mark Carney seeing signs of weakness, Michael Saunders less so - then Chancellor Phillip Hammond seems to be on the side of positivity.If there is some discrepancy in the Bank of England’s view of the economy - Mark Carney seeing signs of weakness, Michael Saunders less so - then Chancellor Phillip Hammond seems to be on the side of positivity.
Speaking at a lunch at the International Monetary Fund’s spring meeting in Washington, Hammond said he was feeling “Tiggerish” about the UK economy, with debt going down, inflation falling and real wages rising.Speaking at a lunch at the International Monetary Fund’s spring meeting in Washington, Hammond said he was feeling “Tiggerish” about the UK economy, with debt going down, inflation falling and real wages rising.
This however is not the first time Hammond has channelled Winnie the Pooh’s bouncy tiger. In March’s spring statement he talked up the successes of the economy and said. “I..am at my most positively Tigger-like.”This however is not the first time Hammond has channelled Winnie the Pooh’s bouncy tiger. In March’s spring statement he talked up the successes of the economy and said. “I..am at my most positively Tigger-like.”
Scottish Power has become the third of the “big six” energy suppliers to announce price rises for some of its customers.Scottish Power has become the third of the “big six” energy suppliers to announce price rises for some of its customers.
Those on the standard variable tariff are facing a 5.5% increase in prices from 1 June.Those on the standard variable tariff are facing a 5.5% increase in prices from 1 June.
It means that for about 960,000 customers, the annual dual fuel bill for gas and electricity will rise by £63 to £1,211.It means that for about 960,000 customers, the annual dual fuel bill for gas and electricity will rise by £63 to £1,211.
Neil Clitheroe, chief executive of Scottish Power Retail, said:Neil Clitheroe, chief executive of Scottish Power Retail, said:
Unfortunately our standard variable prices are increasing. This reflects rising wholesale energy costs and compulsory non-energy costs. Two-thirds of our customers are unaffected.Unfortunately our standard variable prices are increasing. This reflects rising wholesale energy costs and compulsory non-energy costs. Two-thirds of our customers are unaffected.
We will be contacting all customers affected by the price change to give them the opportunity to move to a fixed price tariff alternative and avoid this increase.We will be contacting all customers affected by the price change to give them the opportunity to move to a fixed price tariff alternative and avoid this increase.
It follows similar moves by British Gas and EDF.It follows similar moves by British Gas and EDF.
Donald Trump has criticised Opec over “artificially high” oil prices:Donald Trump has criticised Opec over “artificially high” oil prices:
Looks like OPEC is at it again. With record amounts of Oil all over the place, including the fully loaded ships at sea, Oil prices are artificially Very High! No good and will not be accepted!Looks like OPEC is at it again. With record amounts of Oil all over the place, including the fully loaded ships at sea, Oil prices are artificially Very High! No good and will not be accepted!
Brent crude is currently down 0.3% at $73.57 a barrel, after rising in earlier trading.Brent crude is currently down 0.3% at $73.57 a barrel, after rising in earlier trading.
Will the remaining seven members of the Bank’s Monetary Policy Committee vote with the governor, Mark Carney, or Michael Saunders, at the May policy meeting?Will the remaining seven members of the Bank’s Monetary Policy Committee vote with the governor, Mark Carney, or Michael Saunders, at the May policy meeting?
That is the key question according to Craig Erlam, analyst at currency specialist Oanda, based on the assumption that Carney will vote to leave rates unchanged at 0.5% and Saunders will vote for a hike to 0.75%. Erlam says:That is the key question according to Craig Erlam, analyst at currency specialist Oanda, based on the assumption that Carney will vote to leave rates unchanged at 0.5% and Saunders will vote for a hike to 0.75%. Erlam says:
While a hike is by no means off the table, the comments from Carney are a clear and deliberate warning to markets that the Monetary Policy Committee could delay the move by a few months, at which point the data may be less sketchy and the outlook more clear. Market expectations have since fallen to around 45% for a rate hike and could fall further if fellow policy makers join Carney is playing down an increase in a few weeks.While a hike is by no means off the table, the comments from Carney are a clear and deliberate warning to markets that the Monetary Policy Committee could delay the move by a few months, at which point the data may be less sketchy and the outlook more clear. Market expectations have since fallen to around 45% for a rate hike and could fall further if fellow policy makers join Carney is playing down an increase in a few weeks.
One policy maker that won’t be joining him is Michael Saunders, who spoke this morning about the need to raise interest rates at a “gradual” not “glacial” pace and questioned the significance of first quarter data due to the weather.One policy maker that won’t be joining him is Michael Saunders, who spoke this morning about the need to raise interest rates at a “gradual” not “glacial” pace and questioned the significance of first quarter data due to the weather.
He also claimed labour market inflation pressures are greater than forecast in February so I wouldn’t expect his vote to change next month. The question is what camp the other policy makers sit in, Carney’s or Saunders’.He also claimed labour market inflation pressures are greater than forecast in February so I wouldn’t expect his vote to change next month. The question is what camp the other policy makers sit in, Carney’s or Saunders’.
Investors appear to be placing their bets back on a May rate hike after a typically hawkish speech from Michael Saunders.Investors appear to be placing their bets back on a May rate hike after a typically hawkish speech from Michael Saunders.
Having fallen fairly sharply against the dollar this morning - following Mark Carney’s interview with the BBC - the pound is better shape now.Having fallen fairly sharply against the dollar this morning - following Mark Carney’s interview with the BBC - the pound is better shape now.
It is down 0.1% against the dollar, at $1.4075, and up 0.3% against the euro at €1.1442.It is down 0.1% against the dollar, at $1.4075, and up 0.3% against the euro at €1.1442.
Saunders’ takes a different view to Mark Carney, governor of the Bank of England.Saunders’ takes a different view to Mark Carney, governor of the Bank of England.
Carney said on Thursday night that some of the recent data, such as retail sales, had been softer, and pointed to the fact that inflation has fallen faster than the Bank was predicting in February.Carney said on Thursday night that some of the recent data, such as retail sales, had been softer, and pointed to the fact that inflation has fallen faster than the Bank was predicting in February.
He also suggested that policymakers were aware they could vote for the next hike in rates at any MPC meeting, and were not tied to making such a decision in May.He also suggested that policymakers were aware they could vote for the next hike in rates at any MPC meeting, and were not tied to making such a decision in May.
Andrew Sentance, former members of the MPC, agrees with Saunders:Andrew Sentance, former members of the MPC, agrees with Saunders:
Sensible comments here from Michael Saunders. Hopefully his fellow #MPC members will take note. https://t.co/S3crD8ALbZSensible comments here from Michael Saunders. Hopefully his fellow #MPC members will take note. https://t.co/S3crD8ALbZ
The Bank of England’s Michael Saunders says that “gradual” rate rises does not mean just one per year:The Bank of England’s Michael Saunders says that “gradual” rate rises does not mean just one per year:
‘Gradual’ does not imply that the MPC can only raise rates at a very low frequency, such as once per year. Nor does “gradual” mean that the MPC cannot tighten faster than markets price in.‘Gradual’ does not imply that the MPC can only raise rates at a very low frequency, such as once per year. Nor does “gradual” mean that the MPC cannot tighten faster than markets price in.
He does however say that the Bank does not intend to give signals about the precise timing of a rate rise:He does however say that the Bank does not intend to give signals about the precise timing of a rate rise:
‘Gradual’ does not necessarily mean that the exact timing of rate changes must be totally predictable or signalled in advance.‘Gradual’ does not necessarily mean that the exact timing of rate changes must be totally predictable or signalled in advance.
The MPC does not intend to create unnecessary uncertainty, and gives guidance – based on our economic forecasts – on the expected general outlook for interest rates.The MPC does not intend to create unnecessary uncertainty, and gives guidance – based on our economic forecasts – on the expected general outlook for interest rates.
But I doubt that we will regularly use code words to effectively pre-announce policy decisions from meeting to meeting.But I doubt that we will regularly use code words to effectively pre-announce policy decisions from meeting to meeting.
Michael Saunders, a member of the Bank of England’s Monetary Policy Committee, will be sticking with his vote to raise UK rates in May, his comments in Glasgow suggest.Michael Saunders, a member of the Bank of England’s Monetary Policy Committee, will be sticking with his vote to raise UK rates in May, his comments in Glasgow suggest.
Speaking at the University of Strathclyde, Saunders said the economy no longer needed as much stimulus from the Bank and rises should be gradual but not glacial.Speaking at the University of Strathclyde, Saunders said the economy no longer needed as much stimulus from the Bank and rises should be gradual but not glacial.
Saunders voted for a 0.25 point rise in rates to 0.75% at the MPC’s last meeting in March, but was outvoted by colleagues.Saunders voted for a 0.25 point rise in rates to 0.75% at the MPC’s last meeting in March, but was outvoted by colleagues.
Speaking this morning, he said:Speaking this morning, he said:
With spare capacity largely used up and cost pressures rising, I believe the economy no longer needs as much stimulus as previously. Rather, we probably need to move over time to something more like neutral, in order to ensure a sustainable return of inflation to target.With spare capacity largely used up and cost pressures rising, I believe the economy no longer needs as much stimulus as previously. Rather, we probably need to move over time to something more like neutral, in order to ensure a sustainable return of inflation to target.
The second topic is to explain why – at least from my perspective – any further tightening is likely to be at a gradual pace and to a limited extent. A key point is that “gradual” need not mean “glacial”.The second topic is to explain why – at least from my perspective – any further tightening is likely to be at a gradual pace and to a limited extent. A key point is that “gradual” need not mean “glacial”.