Skip to main content

New interest rate.

 

BoE
The Bank of Eng­land’s chief eco­nom­ist hin­ted at a fur­ther interest rate rise in May when he said the cent­ral bank needed to «see the job through» in its battle to erad­ic­ate high infla­tion.

Huw Pill, however, stressed that the Mon­et­ary Policy Com­mit­tee faced a tight decision on whether to raise interest rates from 4.25 per cent, espe­cially at a time of fin­an­cial mar­ket fra­gil­ity.

«On bal­ance, the onus remains on ensur­ing enough mon­et­ary tight­en­ing is delivered to see the job through and sus­tain­ably return infla­tion to tar­get,» he said in a speech to the Gradu­ate Insti­tute in Geneva.

«Non­ethe­less, those of us on the MPC need to remain vigil­ant to signs of tight­en­ing fin­an­cial con­di­tions and be pre­pared to respond to the macro implic­a­tions of any dis­lo­ca­tion to credit mar­kets to the extent that they influ­ence the out­look for infla­tion».

Pill stressed that he was examin­ing most closely the danger that high infla­tion becomes per­sist­ent in the UK, with com­pan­ies rais­ing prices and work­ers demand­ing higher pay increases to pre­vent a loss of income.

There were no signs in UK data of either excess prof­it­eer­ing driv­ing infla­tion or excess wage rises, he poin­ted out.

He con­sidered the most significant risks were a buoy­ant labour mar­ket com­bined with greater cor­por­ate pri­cing power gen­er­at­ing a sim­ul­tan­eous infla­tion­ary «push» from higher wages along with a «shove» from com­pan­ies rais­ing prices to keep profit mar­gins.

To com­bat this pro­cess, higher interest rates were both a «power­ful» tool to curb spend­ing but also a «blunt» one, he added.

Pill rejec­ted sug­ges­tions that the improved out­look for the eco­nomy since the start of the year increased infla­tion­ary pres­sures. Lower whole­sale nat­ural gas prices would both improve the out­look for eco­nomic per­form­ance and lower infla­tion risks, he said.

In a sep­ar­ate speech, Sil­vana Ten­reyro, an inde­pend­ent MPC mem­ber, dis­agreed with Pill’s view that rapid price increases were now a per­sist­ent fea­ture of the UK eco­nomy.

www.sba.tax

Labels:

Comments

Post a Comment

Cloud Bookkeeping

H&M struggles with profitability.

  H&M blamed high clothes prices ,  its exit from Rus­sia and a cost-cut­ting pro­gramme for an unex­pec­tedly large col­lapse in its earn­ings as the world’s second-largest fash­ion retailer’s struggles with prof­it­ab­il­ity con­tinue .  Oper­at­ing profit plunged 87 per cent to SKr820mn in the fourth quarter to the end of Novem­ber from a year earlier .  Shares in H&M fell more than 4 per cent to SKr125 . 80 yes­ter­day ,  hav­ing lost nearly half of their value since their recent peak in April 2021 .  The Swedish retailer ,  which lags behind Indi­tex ,  the Span­ish owner of Zara ,  in sales and prof­it­ab­il­ity ,  launched a SKr2bn cost-cut­ting pro­gramme last year that included 1 , 500 job losses . H&M’s sales in the fourth quarter were up 10 per cent to SKr64 . 4bn but flat in local cur­rency terms .  It said sales from Decem­ber 1 to Janu­ary 25 had increased 5 per cent in local cur­ren­cies .  «Sales in ...
2 comments
Read more

Commercial properties continue to fall

  UK commercial property values and rents are projected to «tumble off a cliff edge» in the first quarter of 2023, as estate agents warn offices will fare worst as prices fall. A survey of more than 400 commercial agents forecast a 2.9 per cent decrease in prices per square foot across the industry in the first three months of the year, with offices falling 3.1 per cent. «Where we saw the market stop still, we will see the market finding its level, people working out where things are, where value is,» he said. Listed vehicles have already seen this valuation drop in their share prices, with real estates investment trusts such as Land Securities and British Land falling by a fifth or more this year. According to the RIB estate report, offices are expected to suffer the most significant sales price falls, with nearly a third of respondents expecting them to come down by more than 5 per cent. In addition, the survey projected a 1.3 per cent fall in rents per square foot over the perio...
Post a Comment
Read more

BoE is considering to increase deposit guarantee.

  According to anonymous sources, the Bank of England is considering reforming its deposit guarantee scheme. The move comes in response to concerns that the current system may not be sufficient to protect customers in case of a bank failure. The Financial Services Compensation Scheme guarantees deposits up to £85,000 per person per institution. However, some experts have raised concerns that this may not be enough to prevent a run on banks in a significant financial crisis. As a result, the Bank of England is reportedly considering several options for reforming the scheme, including increasing protection and introducing more stringent bank regulations. A final decision on any changes will be made later this year. One option the Bank of England considers is increasing the protection offered by the deposit guarantee scheme. This could involve raising the maximum amount guaranteed per person or extending coverage to more types of deposits. Another possibility is to introduce more stri...
Post a Comment
Read more