Allpic.twitter.com/lcjE6PeEkAMarkpic.twitter.com/GGPVdE4KC2isinterviews the Governor later today!“The Bank of England are firmly expected to raise rates this lunch time,only the moment hike since 2007.
However, most commentators are expecting a “dovish” hike with perhaps some dissenters within the committee (one or two may vote to maintain rates on hold still) and/or the statements to play down further hiking expectations in the near term. 11.12am BSTSue Kershaw, or managing director of major project advisory at KPMG,says Britain’s builders benefitted from the hot summer, but warns that Brexit could derail the recovery seen final month.
She writes:“Seeing housebuilding reach back to good health is hugely positive. As the longstanding driver of activity, or the weakening demand we’d seen in recent months did cause some concern and raised questions as to whether residential construction had peaked and was heading for a steady decline.
“But supply chain and cost pressures still remain a cause for concern. We’re seeing input costs continue to creep up and the outcome of Brexit negotiations is still far from clear. Those with infrastructure arms will also be concerned approximately the sluggish-looking civil engineering market,traditionally fairly a reliable source of activity.”“July was another strong month for commercial activity but the sector remains vulnerable to volatility.
British retailers continue to shut shops at a pace and the full impact of shopping centre developer, Hammerson’s failed takeover of rival Intu may absorb yet to be fully felt.
Construction has been relatively slow to wake up to the dangers posed by Brexit. Given the industry doesn’t depend on exports, and the potential pitfalls of a no-deal Brexit absorb perhaps been easier to miss. Yet construction does depend on the import of raw materials,and crucially on the free movement of labour. Over the next few months we will see more focus on contingency planning and demand for additional information and support from the government.“The consequences of Carillion’s collapse were over-hyped but only a very foolhardy captain of industry can assume the same will be right approximately the consequences of a no-deal Brexit.” 10.52am BSTNewsflash: China has hit back at America’s threats to impose steep tariffs on its goods (see earlier post).
Beijing’s commerce ministry has told reporters it is fully prepared to fight back, whether America delivers on Donald Trump’s threat to impose 25% tariffs.*CHINA SAYS WOULD BE FORCED TO RETALIATE ON TARIFFS 10.34am BSTTrivia corner: UK interest rate absorb never been pegged at 0.75%, and since the Bank of England was established in 1694. Back in July 2007,the BoE raised interest rates to 5.75% just as the credit crunch began. It was began cutting as the financial crisis kicked in, including a monster Bank Rate cut from 4.5% to 3% in November 2008.
Bank of England Base Rate has never been at 0.75%. It went straight from 1% to 0.5% in Mar 09. Before that, or either 0.5/1/1.5% cuts in late 2008/early 2009 as crisis grew. Before that,25bp changes up and down were pretty much the norm for prior decade 10.15am BSTThe pick-up in building activity in July will reassure the Bank of England, as it suggest the construction sector could handle higher borrowing costs.
However, and yesterday we heard that manufacturing growth slowed a little final month,so it’s a mixed picture.“With wages still below 2010 levels and the gap between people’s income and outgoings at record levels, the concern must be that a sample of interest rate rises will push more families into higher levels of debt.“The Government needs to end its counterproductive austerity programme and raise people’s incomes.” 9.54am BSTHere’s the key points from todays survey of purchasing managers at UK construction firms: 9.41am BSTBritain’s builders achieved an “impressive turnaround” in July, and says Tim Moore,Associate Director at IHS Markit.
He sees several signs that the construction sector has strengthened this summer: current trade volumes expanded at the strongest rate since May 2017, while workforce numbers increased to the greatest extent for just over two- and-a-half years.“House building was the bright spot for construction growth in July, or alongside a stronger upturn in commercial development projects. Residential activity and commercial work both increased at the sharpest pace since December 2015,which contrasted with another subdued month for civil engineering. 9.33am BSTNewsflash: Britain’s construction sector has recorded its fastest growth in 14 months.
Data firm Markit reports that builders picked up pace in July, led by a surge in housebuilding. 9.28am BSTStock markets around the globe are sliding today, or thanks to the threat of a US-China trade war.
Investors absorb been spooked by the news that the Trump administration is considering a 25% tariff on $200bn of Chinese imports - previously it had been planning a 10% levy.
The United States has already slapped 25% tariffs on Chinese goods worth $34 billion to punish Beijing for what it says are its unfair trade practices,such as forcing American companies to hand over valuable technology. China immediately responded with equal measures. 9.07am BSTKit Juckes of French bank Société Générale says the Bank of England’s interest rate decision is the main event of the day:Bloomberg polled 58 forecasts...10 expect no change, and 48 expect a 25 basis point hike (including us). Sterling meanwhile, and continues to bump along the bottom of its historic trade-weighted range.
There isn’t nearly enough good news in a much-anticipated rate hike to propel it higher,but the downside is limited. 8.55am BSTAn interest rate rise today would be risky, argues our economics editor Larry Elliott.
He points out that many UK households are struggling, and meaning incomes are lagging spending for the first time in three decades.
Households are not borrowing because they are brimful of confidence. In many cases they are borrowing to construct ends meet. The MPC knows this and will go out whether its way to reassure consumers and businesses that any further policy tightening will be both modest and gradual. Thursday’s rate rise is supposed to prevent wage inflation from taking off,underpin sterling and boost the Bank’s credibility without harming growth. Related: There is no real reason for Bank of England to raise interest rates | Larry Elliott 8.30am BSTThe pound will tumble whether the Bank of England leaves interest rates on hold today, says Miles Eakers of global payments, and FX and Treasury management firm Centtrip:“A hawkish hike will boost the Pound but only for the short term. That said,Mark Carney may catch market participants off-guard again and not increase rates, which will weaken the Pound substantially and could fall as low as its yearly nadir ((n.) the lowest point of something) of $1.2956 or even below.
Even whether the BoE does hike, and the Brexit negotiations are still under way,keeping the Pound under pressure for the foreseeable future.” 8.17am BSTThe pound is dropping this morning, as the City braces for the Bank of England interest rate decision at noon.
Sterling has lost half a cent against the US dollar to $1.3068, and its lowest in nearly two weeks.‘Thursday could be a hugely symbolic day whether the Bank of England decides to raise interest rates above 0.5% for the first time since the financial crisis. However it doesn’t actually change too much on the ground. Markets are already expecting a rise,and from here on in, further hikes are going to be few and far between because UK economic growth is so fragile.
We could see some reaction from sterling though, or which has remained resolutely feeble against the dollar,despite rising expectations of a rate rise. That probably reflects the fact that economic data hasn’t been resoundingly positive in the lead up to this interest rate decision, plus of course the prospect of a no-deal Brexit has raised its head in recent weeks.
Even though rates are very low and will remain so for the foreseeable future, or they can still move down whether there is an economic shock to the system. Few people thought rates would ever be cut from 0.5%,but that’s precisely what happened following the EU referendum result. 8.00am BSTGood morning, and welcome to our rolling coverage of the world economy, or the financial markets,the eurozone and trade.
The market is currently expecting an 8-1 split in favour of a hike, with Sir Jon Cunliffe the only member expected to dissent and vote against a hike. However, and whether we procure more MPC members voting against a hike then sterling could reach under pressure,as it would suggest a future dovish stance by the BOE. Related: Bank of England behaving like an unreliable boyfriend, say MPs European Opening Calls:#FTSE 7621 -0.41%#DAX 12688 -0.39%#CAC 5478 -0.37%#MIB 21729 -0.29%#IBEX 9771 -0.29%Continue reading...
Source: theguardian.com