Bank of England predicts inflation will fall more than expected

·46-min read
The Bank of England has raised interest rates by a quarter of a percentage point - AP Photo/Frank Augstein
The Bank of England has raised interest rates by a quarter of a percentage point - AP Photo/Frank Augstein

Inflation will fall more than expected in the near term after the Government decided to extend its energy bills support, according to the Bank of England.

The Bank has improved its outlook for the UK economy as it decided to raise interest rates by a quarter of a percentage point to 4.25pc.

It said the UK's gross domestic product (GDP) will increase slightly in the second quarter of this year after predicting a 0.4pc decline in its February report.

It credited the rise to the extension of the Government's Energy Price Guarantee, which will keep average annual household energy bills at £2,500 for another three months from April.

This will help inflation to fall to "a lower rate than anticipated" in February.

The 11th consecutive rise in rates increases mortgage costs for homeowners with tracker deals as prices continue to rise for household basics like food and drink.

Policymakers are trying to bring down inflation, which unexpectedly increased to 10.4pc last month, having been widely expected to fall to around 9.9pc.

Fruit and vegetable rationing at supermarkets helped push food prices up at their highest rate in 45 years.

Policymakers said: "CPI increased unexpectedly in the latest release, but it remains likely to fall sharply over the rest of the year."

The latest increase - which is the smallest rise since June last year - is in step with other global central banks.

The US Federal Reserve opted to raise interest rates by 25 basis points to a range of 4.75pc and 5pc on Wednesday.

Last week the European Central Bank raised rates by half a percentage point even amid the worldwide banking turmoil sparked by the collapse of Silicon Valley Bank.

08:31 PM

Good night!

That's all from me. We'll be back first thing tomorrow with the latest updates.

08:27 PM

US government prepared to take 'additional actions' to secure bank deposits

The US government is prepared to repeat emergency action taken to support Silicon Valley Bank and Signature Bank if necessary, the Treasury Secretary will tell lawmakers.

In a written testimony her second day before the House Committee on Appropriations, Janet Yellen said: "We have used important tools to act quickly to prevent contagion. And they are tools we could use again."

She added: “The strong actions we have taken ensure that Americans’ deposits are safe. Certainly, we would be prepared to take additional actions if warranted."

The comments contrast against Ms Yellen's testimony yesterday, where she said the government was not considering ways to guarantee all bank deposits.

08:02 PM

TikTok chief admits Chinese parent company has access to data

TikTok’s chief executive has admitted that users' data can be accessed by its Chinese parent company as it battles a potential ban in the United States.

Technology editor James Titcomb reports:

In a bruising US Congress hearing, Shou Zi Chew told the House Energy and Commerce Committee that staff in China currently have the ability to see TikTok users’ information.

He said: “We rely on global interoperability, and we have employees in China, so yes, the Chinese engineers do have access to global data.”

When asked if TikTok would be willing to divest from Chinese ownership, Mr Chew highlighted that US social media companies - such as Facebook - don't have great track record when it comes to data privacy.

Should TikTok be banned? Cast your vote here.

07:45 PM

BBC told to explain increased spending on US blockbusters

The BBC has been asked to explain why it spends taxpayer money on Hollywood blockbusters rather than “at risk” arts and children’s programmes by the broadcasting regulator.

Senior business reporter James Warrington has the story:

Ofcom said the BBC must disclose how its acquisitions of US films and TV shows support its obligations as a public service broadcaster, as opposed to commissioning original UK programming.

The intervention comes after ITV complained that the BBC had “dramatically” increased its spending on American imports in recent years.

It pointed to deals for blockbusters such as Marvel’s Avengers Assemble and Disney hit Frozen, as well as buying “first look” rights to shows including The People vs OJ Simpson and American Crime Story.

Here's what rival ITV had to say about this...

07:36 PM

Hershey to reduce traces of metals from chocolate bars

Hershey is exploring ways to reduce traces of heavy metals in its dark chocolate, after reports that its bars contained potentially harmful levels of lead and cadmium.

It comes after non-profit group Consumer Reports found that some of Hershey's dark choclate bars contained possibly harmful levels of lead, cadmium or both for people who eat more than one ounce per day.

The trace amounts of the metals found in some chocolate are "below any recommended level, any standard," chief financial officer Steve Voskiul told Reuters.

He added: "Depending on where you source, you may get relatively more lead or cadium in West Africa versus South America, but in both cases it’s a naturally occurring ingredient."

The US chococlate manufacturer is now evaluating if it can remove more metals through additional cleaning of cocoa beans or alternate sourcing.

It faces multiple lawsuits from consumers who claim the chocolate maker should have disclosed the levels of heavy metals, and that they would have paid less for or not bought the products had they known.

07:20 PM

Block explores legal action over claims it misled investors

Block has described allegations that it misled investors as "factually inaccurate and misleading".

The payment company, led by Twitter founder Jack Dorsey, has responded to a report published by Hindenburg Research after a two-year investigation.

The short seller claimed Block's popular Cash App is likely facilitating fraudsters.

Block said in a statement:

We intend to work with the SEC and explore legal action against Hindenburg Research for the factually inaccurate and misleading report they shared about our Cash App business today.

Hindenburg is known for these types of attacks, which are designed solely to allow short sellers to profit from a declined stock price. We have reviewed the full report in the context of our own data and believe it’s designed to deceive and confuse investors.

We are a highly regulated public company with regular disclosures, and are confident in our products, reporting, compliance programs, and controls. We will not be distracted by typical short seller tactics.

Block's share price has fallen 15.17pc to $61.63.

The payment company is led by Twitter founder Jack Dorsey - JIM WATSON/AFP via Getty Images
The payment company is led by Twitter founder Jack Dorsey - JIM WATSON/AFP via Getty Images

07:09 PM

Bitcoin resumes climb towards $30,000

The price of Bitcoin has resumed its push back towards $30,000.

The digital token has climbed 4.92pc today and is now trading at $28,310.40, recovering from yesterday's sharp decline after the Federal Reserve's interest rate decision.

“The move is notable but not excessive,” Chris Newhouse, a derivatives trader at crypto investment firm GSR, said. “A move below $25,000 or above $30,000 probably would’ve seen increased volume in the derivatives markets and more speculative bets start to take place.”

Bitcoin hasn't traded at $30,000 since last June.

Earlier today, the US Securities and Exchange Commission cautioned investors against the risks of crypto assets.

Ther investor alert said:

Investments in crypto asset securities can be exceptionally volatile and speculative, and the platforms where investors buy, sell, borrow, or lend these securities may lack important protections for investors.

The risk of loss for individual investors who participate in transactions involving crypto assets, including crypto asset securities, remains significant.

Meanwhile Coinbase's share price has tumbled 14.35pc today after the SEC warned of possible legal action against the cryptoexchange.

06:43 PM

Gilt yields sharply retreat

Yields on British government bonds retreated today as the Bank of England's raised interest rates in line with market expecations.

The yield on the two-year gilt fell to 3.27pc, down from 3.48pc at yesterday's close.

The 10-year yield today sank to 3.34pc, falling from 3.44pc.

06:13 PM

Weak performing bank stocks weigh down FTSE 100

The FTSE 100 has dropped 0.89pc to close at 7,499.60, with a stronger pound weakening the exporter-heavy index.

The midcap FTSE 250 index dipped 0.15pc to finish at 18,729.96, althought it's higher than deeper falls today.

Shares in UK-listed banks reversed yesterday's gains, with the FTSE 350 Banks index closing 1.45pc lower. Fallers include HSBC (share price down 2.59pc), Lloyds (down 1.59pc), Barclays (2.51pc) and Standard Chartered (down 1.29pc).

05:47 PM

City stockbrokers agree to £43m merger

City stockbrokers FinnCap and Cenkos have agreed to a £43m merger, months after takeover talks with Panmure Gordon broke down.

The all-share deal will create an investment bank with 230 employees and combined revenues of more than £50m.

The merger will be followed by cost reductions in “areas of duplicative or inefficient spending”, the London-listed firms said in a joint statement.

In particular, the pair expect layoffs over the next year, particularly within central and support functions.

"The FinnCap board and the Cenkos board are mindful of the market challenges faced by the broking sector in recent years and that as this highly fragmented market is becoming increasingly competitive, scale is becoming increasingly important,” the companies said.

It comes after merger negotiations between FinnCap and investment bank Panmure Gordon ended late last year.

05:20 PM

Which Prime Minister has taxed you the most?

Rishi Sunak has ushered in a new era of high taxation - but would you be better off under a previous PM? Click here here to find out...

05:04 PM

National Express workers to vote on improved pay offer

Thousands of National Express bus drivers will vote on a new offer aimed at resolving a pay dispute.

Unite said its 3,100 members working on National Express buses in the West Midlands will continue with a strike launched earlier this week while they vote. The ballot result is due on Saturday.

Unite national officer Onay Kasab said:

Following negotiations today, National Express put forward an improved pay offer which will be put to our members in a vote over the next two days.

Unite will be making no further comments during the ballot period.

A National Express bus driver’s starting salary currently begins at £11.80 an hour, climbing to just over £14 after three years of service.

Thousands of National Express bus drivers will vote on a new offer - Jacob King/PA Wire
Thousands of National Express bus drivers will vote on a new offer - Jacob King/PA Wire

04:58 PM

Magic circle law firm to allow workers to exchange bank holidays

Magic circle law firm Linklaters will soon allow employees to swap bank holidays for more convenient dates in a flexible working push.

The London firm's new scheme enables UK employees to take up to three bank holidays at another time that works for them, in the same holiday year.

The public holidays elligble for exchange includes August Bank Holiday, Good Friday and Easter Monday.

The initiative, which launches in May, follows similar measures announced last year by City law firm Herbert Smith Freehills and Deloitte.

Angela Ogilvie, chief HR officer at Linklaters, commented

This scheme reflects the diversity of cultural and religious events celebrated across the firm and enables people to flex their UK bank holidays to mark those events that are most meaningful to them, without having to take annual leave.

04:36 PM

Handing over

That's all from me. Adam Mawardi will take things from here. I leave you with this chart on the state of Bitcoin today:

04:27 PM

TikTok boss faces off with Congress over security fears

The chief executive of TikTok has faced a grilling from a US congressional committee in a rare public appearance where made his own case for why the hugely popular video-sharing app should not be banned.

Shou Zi Chew's testimony came at a crucial time for the company, which has acquired 150m American users but is under increasing pressure from US officials - and has just been banned from all parliamentary devices in the UK.

TikTok and its parent company ByteDance have been swept up in a wider geopolitical battle between Beijing and Washington over trade and technology.

Committee Chair Cathy McMorris Rodgers, a Republican, said: "Mr Chew, you are here because the American people need the truth about the threat TikTok poses to our national and personal security.

"TikTok has repeatedly chosen a path for more control, more surveillance and more manipulation."

Mr Chew, a 40-year-old Singapore native, told the House Committee on Energy and Commerce that TikTok prioritises the safety of its young users and denied allegations that the app is a national security risk.

He reiterated the company's plan to protect US user data by storing all such information on servers maintained and owned by the server giant Oracle.

He said: "Let me state this unequivocally: ByteDance is not an agent of China or any other country."

TikTok chief executive Shou Zi Chew testifies to Congress - AP Photo/Alex Brandon
TikTok chief executive Shou Zi Chew testifies to Congress - AP Photo/Alex Brandon

04:08 PM

US new home sales edge up in February

Sales of new homes in the United States ticked up in February, the Commerce Department said, with a lack of supply of existing homes adding to demand for new properties.

Sales of new single-family houses edged up 1.1pc to an annual rate of 640,000 last month, seasonally adjusted, the department said in a statement.

This was up from January's revised rate of 633,000.

But overall, the property sector - which is sensitive to interest rates - has been reeling as the Federal Reserve lifted the benchmark lending rate rapidly over the past year to tackle high inflation.

Compared with the estimate for February 2022, the latest figure is 19pc lower.

The median sales price of new houses sold in February was $438,200, up from January.

03:48 PM

Banks more robust than 2008, insists Bailey

The Governor of the Bank of England has said the global banking system is more robust and better capitalised
than in was in 2008.

Andrew Bailey said the institution "learned a lot of lessons in the financial crisis" as the Monetary Policy Committee raised interest rates to 4.25pc.

He told broadcasters:

Of course we keep learning lessons. I'm confident that in this country we are in a much stronger position.

Their capital is stronger, their funding is stronger, and so far I think we've seen the signs that they’ve come through that robustly.

I don't think it's a repeat of 2008 at all. We've obviously increased the regulation of the banking system since then.

Mr Bailey was upbeat about the outlook for the UK economy, saying households can "rely" on the soundness of the country's banking sector after the turmoil that engulfed Credit Suisse and Silicon Valley Bank in recent weeks.

03:38 PM

Cyber security is 'a top priority' for Parliament

Some more details here on the decision to ban TikTok from parliamentary devices.

The commissions of the House of Commons and House of Lords announced they will follow the move taken by the Government on official devices.

A spokesman for Parliament said:

TikTok will be blocked from all parliamentary devices and the wider parliamentary network.

Cyber security is a top priority for Parliament, however we do not comment on specific details of our cyber or physical security controls, policies or incidents.

03:24 PM

TikTok banned from all parliamentary devices

TikTok will be blocked from "all parliamentary devices and the wider parliamentary network", Parliament has announced, citing the need for cyber security.

It comes as the social media app's chief executive appears before Congress this afternoon in an attempt to convince them that the Chinese-owned short video app should not be barred for being a potential national security threat to the United States.

Shou Zi Chew's testimony before Congress will also cap a week of actions by the Chinese company aimed at convincing Americans and their politicians that the app creates economic value and supports free speech.

TikTok chief executive Shou Zi Chew testifies before the House Energy and Commerce Committee - JIM WATSON/AFP via Getty Images
TikTok chief executive Shou Zi Chew testifies before the House Energy and Commerce Committee - JIM WATSON/AFP via Getty Images

03:17 PM

Accenture to cut 19,000 jobs

Accenture has said it will cut 19,000 jobs over the next 18 months, joining a growing list of companies in the consulting sector laying off workers amid a challenging economic environment.

The consultancy expects to incur $1.2bn (£980m) in employee severance and other personnel costs, and will spend an extra $300m (£243.8m) on office space consolidation.

Accenture's job cuts, which make up about 2.5pc of its workforce, are the biggest announced in the consulting sector yet.

Last month McKinsey revealed plans to axe 2,000 jobs, after seeing a rapid growth in headcount during the past decade, while KPMG announced it laid off almost 700 professionals from its US advisory practice amid slowing demand.

Others like EY are trimming their hiring targets by thousands of people.

Accenture - REUTERS/Dado Ruvic
Accenture - REUTERS/Dado Ruvic

03:05 PM

Block shares plunge amid claims it misled investors

Shares of Block, led by Twitter founder Jack Dorsey, have slumped after a short seller alleged the payments company has misled investors.

Block has declined 20pc in New York after the report was published by Hindenburg Research after a two-year investigation.

It claimed that Block's popular Cash App is likely facilitating fraudsters.

Earlier this year the firm, run by Nathan Anderson, triggered a selloff in shares of billionaire Gautam Adani's companies with allegations of accounting fraud and stock manipulation.

The conglomerate's flagship Adani Enterprises has dropped 48pc since the report, even as the group denied Hindenburg's
allegations.

Hindenburg's report on electric-vehicle maker Nikola in September 2020 sent the stock plunging and led to criminal charges against the company's founder, Trevor Milton. He was convicted in October of defrauding investors.

Block has not yet responded to requests for comment.

02:37 PM

US markets open higher amid hopes of Fed rate pause

Wall Street's main indexes opened higher after the Federal Reserve hinted it was close to pausing interest rate increases amid a turmoil in the banking sector that threatens to cause a severe economic downturn.

The Dow Jones Industrial Average rose 71.38 points, or 0.2pc, at the open to 32,101.49.

The S&P 500 opened higher by 22.24 points, or 0.6pc, at 3,959.21, while the Nasdaq Composite gained 141.36 points, or 1.2pc, to 11,811.32 at the opening bell.

02:36 PM

'Private sector only very slowly adapting to a higher cost of capital'

Here is another reason interest rates may still move higher across the world:

02:33 PM

Rates may rise another 50 basis points in May, says ECB chief

European officials will probably need to increase interest rates in May, according to an ECB chief,

Governing Council member Klaas Knot said he cannot yet judge how big a move that should be.

The Dutch central-bank chief was speaking in Amsterdam one week after he and colleagues delivered a half-point increase in the face of financial turmoil that had engulfed Credit Suisse in Switzerland. He said:

Without this episode, the risks to the inflation outlook were so strongly tilted to the upside that I would have been very convinced that we need to make another step in May.

I still think that we need to make another step in May, but I don't know the size of that.

One of the factors that will go into that position is how much sort of extra tightening we are already getting from this risk aversion.

How big that effect is going to be, nobody can say because we don’t know how long-lasting this sort of risk aversion in the markets will be.

Luckily, our next meeting is only six, seven weeks away from now, so we still have time.

02:22 PM

Interest rate decision was a 'tricky one,' says CBI economist

Anna Leach, deputy chief economist at the CBI business group, said the Bank of England's decision to raise rates to 4.25pc was a "tricky one for the MPC".

She said it took place "against the backdrop of recent global financial market turbulence, a surprise rise in domestic inflation and a Budget which provided more support for the economy". She added:

The MPC will also have an eye to the recent turmoil in the banking sector.

While financial stability is the remit of the FPC, an excessive tightening in credit conditions for businesses and households arising from financial market turbulence could cause the MPC to reconsider the level of interest rates in future months.

02:00 PM

Hunt: We will continue to 'play our part' on beating inflation

Following the interest rate increase by the Bank of England, Chancellor Jeremy Hunt said:

With rising prices strangling growth and eroding family budgets, the sooner we grip inflation the better for everyone.

That's why we support the Bank of England's actions today and why we will continue to play our part in this fight by being responsible with the public finances, alongside providing cost of living support worth an average of £3,300 per household over this year and next.

Jeremy Hunt has said 'the sooner we grip inflation the better for everyone' - Zara Farrar / HM Treasury
Jeremy Hunt has said 'the sooner we grip inflation the better for everyone' - Zara Farrar / HM Treasury

01:56 PM

Rates 'cure is worse than the disease', warns analyst

The Bank of England's quarter of a percentage point increase comes after the US Federal Reserve made the same move on Wednesday night.

This was despite pressure to halt rate rises in an effort to ease the turmoil in the banking sector, which has suffered as rising interest rates have hit bond prices.

Jonathan Moyes, head of investment research at Wealth Club, said:

The Bank's hands have been tied by the 0.25pc rate rise in the US and the higher than-expected UK inflation print earlier in the week. A 0.25pc rise was expected.

However, we understand why there is a growing chorus of commentators calling for a pause here.

The US and Europe have come very close to a banking crisis over the previous two weeks and monetary conditions will tighten significantly as a result, placing further strain on the sector.

We will have to wait for the May report to get the MPC's full assessment of the recent turmoil, however, it is pleasing to see the FPC reiterate its confidence in the strength of the UK banking sector.

With inflation expected to fall rapidly in the near term and interest rates close to their peak, it seems the inflation beast has been tamed.

However, we may soon discover 'the cure is worse than the disease' as the banking sector groans under the weight of aggressive rate rises.

01:49 PM

Market 'underestimates the risk' of more rate increases, says analyst

Following the interest rate increase, Validus Risk Management's head of global capital markets Marc Cogliatti, said:

The decision comes in the wake of a higher-than-expected UK CPI reading, which reaffirmed the dilemma facing the Monetary Policy Committee (MPC).

On the one hand, they want to avoid heaping undue pressure on the UK consumer at a time when everyone is having to overcome the rising cost of living.

But on the other, the committee needs to ensure that inflation does not escalate further, therefore adding to people's woes.

Although another 25 basis point hike is fully priced into the market by June, there is little expected beyond there.

In our view, this underestimates the risk of rates having to go higher in the months ahead to avoid inflation expectations becoming further embedded and CPI spiralling further out of control.

The Financial Policy Committee's assessment is that the banking system is 'resilient'.

If the MPC are not concerned about the banking system, it is a further reason why they might feel comfortable raising rates again in the months ahead.

01:44 PM

Bank to make full assessment of financial turmoil in next forecast

The Monetary Policy Committee (MPC) recognised the recent period of volatility in the global banking sector in its latest report.

Its decision to raise rates comes after the collapse of the US's Silicon Valley Bank and the rescue takeover of Credit Suisse.

However, the Bank stood firm in its mission to bring inflation back down to its 2% target.

Policymakers said: "The economy has been subject to a sequence of very large and overlapping shocks.

"Monetary policy will ensure that, as the adjustment to these shocks continues, CPI inflation will return to the 2pc target sustainably in the medium term."

The MPC said it would make a "full assessment" of recent banking woes and market volatility in its forecast in May.

01:35 PM

Bank of England raises rates at slower pace than Europe

The Bank of England's rate rise leaves it raising rates at a slower pace than its European neighbours.

The Swiss National Bank raised rates by half a percentage point this morning, with the ECB also jumped by 50 basis points last week despite the global banking turmoil.

01:17 PM

Markets unfazed by rate decision

There has not been a huge reaction in the markets following the Bank of England's interest rate decision, suggesting the 25 basis point rise had already been priced in.

The pound remains up about 0.4pc against the dollar at $1.23.

The FTSE 100 has fallen 0.9pc on the day, while the domestically-focused FTSE 250 has dropped 0.4pc so far, although this is up from deeper earlier falls.

The yield on two-year Government gilts has fallen nearly nine basis points to 3.375pc.

01:12 PM

Dhingra and Tenreyro voted against rate rise

Seven members of the Bank of England's Monetary Policy Committee (MPC) voted to increase the base interest rate from 4pc to 4.25pc.

They took the decision after official figures earlier this week showed a surprise increase in CPI inflation in February and as they judged that the UK's economy was likely to perform stronger than previously thought.

Two members, Swati Dhingra and Silvana Tenreyro, voted against the rise, arguing that some of the recent increases to the base rate have not yet filtered through into the real economy.

01:09 PM

Economy to grow in second quarter, says Bank of England

The Bank of England has raised its outlook for the economy in the near term.

In its monetary policy summary, it said:

GDP is still likely to have been broadly flat around the turn of the year, but is now expected to increase slightly in the second quarter, compared with the 0.4pc decline anticipated in the February Report.

As the Government's Energy Price Guarantee (EPG) will be maintained at £2,500 for three further months from April, real household disposable income could remain broadly flat in the near term, rather than falling significantly.

The labour market has remained tight, while the news since the MPC's previous meeting points to stronger-than-expected employment growth in 2023 Q2 and a flat rather than rising unemployment rate.

01:04 PM

UK banking system 'remains resilient' says Bank of England

The Bank of England said in its latest monetary policy report that global growth "is expected to be stronger than projected" in its last meeting and that the UK banking system "remains resilient".

It admitted that core consumer price inflation in advanced economies has remained elevated but said wholesale gas futures and oil prices have fallen materially. It said:

There have been large and volatile moves in global financial markets, in particular since the failure of Silicon Valley Bank and in the run-up to UBS's purchase of Credit Suisse, and reflecting market concerns about the possible broader impact of these events.

Overall, government bond yields are broadly unchanged and risky asset prices are somewhat lower than at the time of the Committee’s previous meeting.

The Bank of England's Financial Policy Committee (FPC) has briefed the MPC about recent global banking sector developments.

The FPC judges that the UK banking system maintains robust capital and strong liquidity positions, and is well placed to continue supporting the economy in a wide range of economic scenarios, including in a period of higher interest rates.

The FPC's assessment is that the UK banking system remains resilient.

01:00 PM

Interest rates rise to 4.25pc

As expected, the Bank of England has raised interest rates by 25 basis points to 4.25pc.

The Monetary Policy Committee voted in favour of the hike by a majority of 7-2.

12:56 PM

Rates decision soon

In about five minutes we will know at what level the Bank of England has decided to set interest rates.

Stay tuned...

12:39 PM

Construction firms fined nearly £60m over demolition cartel

The competition watchdog has fined 10 construction firms a total of almost £60m for "illegally colluding" to rig bids for contracts.

The construction firms have been punished over cartel agreements related to 19 contracts worth over £150m on both public and private sector contracts.

The Competition and Markets Authority (CMA) said the bid rigging, which took place between 2013 and 2018, included contracts for the development of Bow Street Magistrates' Court and Police station and at Selfridges department store in London.

Three directors of firms involved in the cartel action have also been disqualified, the CMA said.

An investigation by the regulator found that the 10 firms illegally colluded to rig bids for demolition and asbestos removal contracts.

Bids were rigged by one or more firms agreeing to submit bids which were deliberately priced to lose the tender, in order to make the process appear competitive.

The firms fined are: Brown and Mason (£2.4m), Cantillon (£1.92m), Clifford Devlin (£423,615), DSM (£1.4m), Erith (£17.5m), JF Hunt (£5.6m), Keltbray (£16m), McGee (£3.77m), Scudder (£8.25m) and Squibb (£2m).

12:22 PM

Ford's electric vehicle business loses £2.4bn in two years

Ford's electric vehicle business has lost $3bn (£2.4bn) before taxes during the past two years and will lose a similar amount this year as the company invests heavily in the new technology.

The figures were released today as Ford rolled out a new way of reporting financial results.

The new business structure separates electric vehicles, the profitable internal combustion and commercial vehicle operations into three operating units.

Company officials said the electric vehicle unit, called 'Ford Model e,' will be profitable before taxes by late 2026 with an 8pc pretax profit margin.

They would not say exactly when it is expected to start making money.

Model e had pretax losses of $900m in 2021 and $2.1bn last year, and it is expected to lose $3bn this year.

Ford unveiled its electric Explorer SUV this week - Chris J. Ratcliffe/Bloomberg
Ford unveiled its electric Explorer SUV this week - Chris J. Ratcliffe/Bloomberg

12:03 PM

Bank should hold off on raising interest rates, says Liverpool professor

The Bank of England should hold off on raising interest rates as inflation will fall as the year progresses, according to an academic.

The Bank's own forecasts say inflation will fall to 3pc by the first quarter of next year and 1pc by the first three months of 2025.

University of Liverpool professor of finance Costas Milas said:

The Bank of England is almost certain to raise interest rates by 0.25 percentage points today not least because both the ECB and the Fed have hiked with inflation in the US and the Eurozone being lower than the 10.4pc inflation reading in the UK.

However, monetary policy should be forward looking rather than dependent on current inflation not least because a hike today will not affect inflation immediately.

I believe that the 'wait and see approach' is better than hiking now since UK inflation will fall rapidly by the end of the year.

11:48 AM

Apple considers bid for Premier League streaming rights

Apple has been named as the latest tech giant aiming to secure streaming rights for Premier League games

The world's largest company is considering a bid for rights to show top flight English matches as well as lower league games, according to Bloomberg.

Apple has recently expanded into live sports in the US, securing a $2.5bn 10-year deal to show Major League Soccer.

Entering the race to show English football would put the company against Sky, BT Sport, and streaming giant Amazon.

Apple is reportedly considering a bid to stream English football - Stuart MacFarlane/Arsenal FC via Getty Images
Apple is reportedly considering a bid to stream English football - Stuart MacFarlane/Arsenal FC via Getty Images

11:21 AM

Oil prices fall as Fed insists no rate cuts this year

Oil prices have fallen as investors weigh up the Federal Reserve policy outlook after another increase in interest rates.

Brent crude, the international benchmark, has fallen 1pc below $76 a barrel, while US-produced West Texas Intermediate  has dropped 1.1pc toward $70.

Fed Chairman Jerome Powell advised that more tightening may be in store after Wednesday's 25 basis-point rise.

He added that rates will not be cut this year. The comments came less than two weeks after the most severe banking crisis since 2008.

The appeal of risk assets including commodities was also bruised after Treasury Secretary Janet Yellen said regulators were not looking to provide "blanket" deposit insurance to stabilise the banking system.

Crude is headed for the steepest first-quarter drop since 2020, when the pandemic hammered demand.

The slump has been driven by concerns about a potential US recession, robust Russian flows despite Western sanctions, and the banking turmoil.

11:05 AM

Gas prices rise as European temperatures lag

European gas prices have risen as below-average temperatures across the continent boost demand.

Dutch front-month futures - the benchmark for pricing - rose as much as 3.7pc in a rebound from a decline on Wednesday.

Temperatures are likely to be about 5pc below the norm for this time of year across the UK, Germany and France next week, according to forecaster Maxar.

Wholesale European natural gas has been trading close to €41 per megawatt hour, up 2.4pc.

10:52 AM

Lloyd's of London hit by bond market downturn

Lloyd's of London dropped to a loss last year after marking down the value of its bonds in the wake of rising interest rates.

The world's largest insurance exchange reported a pre-tax loss of £769m in 2022, down from a profit of £2.3bn the previous year.

It fell into the red after valuation losses on its investments dampened a positive underwriting result.

Lloyd's said it reported a net investment loss of £3.1bn after market turbulence eroded values across its portfolio.

The exchange said losses engulfed assets from investment grade fixed income bonds to equity markets, with long duration assets the most affected.

Lloyd's said in the statement: "2022 was an exceptionally turbulent year for risk assets, driven by rising interest rates, as central banks have taken action to contain the increasing levels of inflation caused by supply chain disruption, the war in Ukraine and political uncertainty."

The Lloyd's of London building in the City - REUTERS/Andrew Winning
The Lloyd's of London building in the City - REUTERS/Andrew Winning

10:35 AM

Bank split of 7-2 on rate rise will be 'bullish for pound'

A 7-2 split on the Monetary Policy Committee in favour of a 25 basis point rise in interest rates would still be "bullish for the pound" according to analysts.

However, greater division on the committee over the rate increase could send sterling downwards, according to Matthew Ryan, head of market strategy at financial services firm Ebury. He said:

Once again, we are preparing for some rather muddled, and vague communications from the MPC this week, which is unlikely to provide investors with much clarity on future policy moves - a common theme in recent months.

Governor Bailey has recently hinted that the bank may soon be done raising rates, although the latest upside surprise in UK inflation could lead to a modestly more hawkish set of communications.

We now see a good chance that the vote is split 7-2 in favour of another 25bp move, which would likely be bullish for the pound.

A closer 6-3 or 5-4 vote may be bearish for the UK currency, while a surprise vote in favour of no change would likely trigger a sharp sell-off in GBP, particularly if accompanied by hints that tightening may be at an end.

The pound has risen 0.4pc against the dollar this morning to be worth more than $1.23.

10:13 AM

Inaction on Credit Suisse would have been 'irresponsible,' says Swiss central bank chief

A Credit Suisse collapse would have had "serious consequences for national and international financial stability," Switzerland's central bank chief as said as the country raised interest rates.

The Swiss franc has gained against the pound and the euro after the country's central bank raised interest rates by 50 basis points to 1.5pc and hinted at more rises to come.

The Swiss National Bank said it could not rule out that more rises will be necessary to ensure price stability over the medium term.

It said the measures announced at the weekend by the country's government - when Credit Suisse was taken over by UBS - have put a halt to the crisis.

Swiss National Bank chairman Thomas Jordan said:

A Credit Suisse bankruptcy would have had serious consequences for national and international financial stability and for the Swiss economy.

Taking this risk would have been irresponsible.

He added: "To provide appropriate monetary conditions, the SNB also remains willing to be active in the foreign exchange market."

Swiss National Bank has raised interest rates - Peter Schneider/Keystone via AP
Swiss National Bank has raised interest rates - Peter Schneider/Keystone via AP

09:58 AM

SEC warns Coinbase it may have violated US laws

Coinbase has been warned by US financial regulators that it may have violated US laws, sending its shares price falling as much as 12pc in after hours trading.

Securities and Exchange Commission (SEC) chairman Gary Gensler has repeatedly said many of the tokens and products offered by crypto companies are securities and that the trading platforms need to register with his agency.

Those warnings ramped up after investors faced billions of dollars in losses following the collapse of several prominent companies last year, including Sam Bankman-Fried's FTX.

Coinbase said it faces a so-called Wells notice from the SEC regarding aspects of its exchange.

This includes its staking service Coinbase Earn and Coinbase Wallet, as well as an undefined segment of its listed digital assets.

A Wells notice is sent at the end of an SEC investigation stating that regulators are planning to bring an enforcement action against them.

Coinbase - REUTERS/Dado Ruvic
Coinbase - REUTERS/Dado Ruvic

09:47 AM

Swiss regulators defend bondholder wipeout in Credit Suisse rescue

Swiss regulators have defended their decision to write down so-called additional tier-1 bonds before shareholders as it pushed UBS into a shotgun marriage with Credit Suisse over the weekend.

Usually bondholders are given preferential treatment ahead of shareholders if a business collapses, but this was not the case with the Swiss bank's rescue, enraging those with the AT1 bonds.

In a statement today, Finma said the Credit Suisse AT1 bonds "contractually provide that they will be completely written down in a 'viability event', in particular if extraordinary government support is granted".

It added: "As Credit Suisse was granted extraordinary liquidity assistance loans secured by a federal default guarantee on 19 March 2023, these contractual conditions were met for the AT1 instruments issued by the bank."

UBS took over Credit Suisse on Sunday - DANIEL LEAL/AFP via Getty Images
UBS took over Credit Suisse on Sunday - DANIEL LEAL/AFP via Getty Images

09:22 AM

Banks and stronger pound send FTSE 100 lower

Bank stocks pushed the FTSE 100 down as the pound strengthened ahead of what will likely be the Bank of England's 11th straight interest rate increase later today.

The FTSE 100 has fallen 0.4pc after recording its highest closing level in more than a week on Wednesday.

The pound rose against the dollar after the Federal Reserve raised interest rates by an expected 25 basis points (bps) on Wednesday, but indicated it was on the verge of pausing further increases after a global banking rout.

Sterling has continued the rise this morning, climbing by 0.4pc to more than $1.23.

The focus now shifts to the BoE, which is widely expected to also raise its lending rate by 25 basis points. Expectations had shifted sharply after data on Wednesday showed an unexpected rise in UK inflation.

UK banks lost as much as 1.1pc in early trade after two straight days of gains.

The FTSE 250 midcap index is flat after earlier falling 0.2pc.

Informa dropped 1.7pc after Morgan Stanley cut its rating on the events organizer's stock to "equal-weight" from "overweight".

09:13 AM

Wickes hit by end of lockdown DIY boom

DIY chain and builders' merchants Wickes has revealed a fall in annual profits after the end of the lockdown DIY boom.

The company reported falling annual profits despite record sales and revealed pressure on trading so far in 2023.

The group posted a 38.4pc slump in pre-tax profits to £40.3m in 2022. On an underlying basis, pre-tax profits dropped 11.3pc to £75.4m.

It notched up record revenues of £1.6bn, up 1.8pc on 2021, but saw its core like-for-like sales ease back 2pc, with the group suffering steep declines at the start of the year as trade eased back from the boom seen during the pandemic.

However, Wickes added that core sales in the first 11 weeks of 2023 remained "moderately behind" a year ago as DIY demand continues to "normalise".

Chief executive David Wood said:

While profit declined, the outcome is still significantly ahead of the pre-Covid period. Like all businesses we remain watchful of the external consumer environment.

However, we have the right strategy and a compelling offer for customers, and look to the future with confidence.

Wickes
Wickes

09:03 AM

FTSE 100 falls ahead of Bank of England decision

The FTSE 100 has begun the day lower ahead of the Bank of England's rate decision.

London's blue-chip index has opened 0.4pc lower at 7,533.46 while the FTSE 250 has opened 0.2pc lower at 18,718.17.

The export-orientated FTSE 100 suffers if the pound strengthens. It hit a seven week high after the Fed raised rates by 0.25 basis points, having been heavily expected to raise rates by 0.5 basis points before the banking turmoil hit markets.

08:52 AM

Gambling Commission fines 32Red and Platinum Gaming £7.1m

Online gambling operators 32Red and Platinum Gaming - both part of Kindred Group - have been fined £7.1m for social responsibility and anti-money laundering failures, the Gambling Commission said.

32 Red Limited, which runs 32red.com, will pay £4,195,655 and Platinum Gaming Limited, which runs unibet.co.uk, will pay £2,937,599.

Both have also received an official warning following the Gambling Commission investigation.

32Red's social responsibility failures included failing to identify customers at risk of harm based on their session times, and not having effective enough controls to identify and protect potential problem gamblers.

One customer was allowed to deposit £43,000 and lose £36,000 within seven days, the commission said.

Some self-excluded or blocked customers were able to register on Platinum Gaming after being blocked or self-excluded on the 32Red platform, and Platinum Gaming also failed to identify and interact with customers who may have been experiencing harm.

32 Red, which runs 32red.com, has been fined for failing to identify customers at risk of harm - Alan Crowhurst/Getty Images
32 Red, which runs 32red.com, has been fined for failing to identify customers at risk of harm - Alan Crowhurst/Getty Images

08:35 AM

Amigo Loans to be wound down

Troubled loan company Amigo has has halted lending and will be wound down after it failed to raise money to compensate former customers  under a scheme sanctioned by the High Court last year.

The business will be liquidated over the next year after bosses concluded it was "highly unlikely" it would be able to raise money from new investors in order to fund some of the repayments and keep its doors open.

Bosses said that they have "not received sufficient aggregate indications of interest to cover the total amount".

Staff will be consulted over the coming days.

The company said: "Our priority is to now undertake an orderly wind-down of both the Amigo Loans Ltd business and the wider group over the next 12 months or so in which we maximize returns for scheme creditors and look after our people as we move through the process."

A past Amigo Loans advert
A past Amigo Loans advert

08:31 AM

Bank of England faces 'far from an enviable decision'

As of this morning, traders are pricing in an 87pc chance that the Bank of England will increase interest rates by 0.25 percentage points later.

Daniel Jones, a corporate and FX dealer at Moneycorp, said:

The Bank of England faces a difficult decision today as it balances inflation risks against the country's economic prosperity.

The demise of Silicon Valley Bank and the subsequent rescue of Credit Suisse have highlighted just how fragile the financial system is.

One wrong move now will only add further pressure, and another rate hike could well be the thing that throws an already delicate balance off-kilter.

Last year, the UK avoided a recession by a hair, and a rate rise at this stage could catalyse even tighter trading conditions for SMEs and push the UK economy over the edge.

The Bank of England's separate plans to end favourable lending treatment for SMEs will add fuel to that same fire.

A halt on rate hikes would help to keep UK SMEs' heads above water, but with continued high energy costs and increasing wage growth, inflation could very easily spiral out of control. It’s far from an enviable decision.

08:24 AM

More banks will fail as interest rates rise, warns L&G chief

More banks will fail as interest rates continue to rise, an investment chief has warned, as the Bank of England is expected to announce another increase to fight rising inflation.

The Bank's Monetary Policy Committee is widely expected to increase interest rates by a quarter of a percentage point to 4.25pc this lunchtime.

It comes after inflation unexpectedly increased to 10.4pc last month, driven by food prices rising at their highest rate in 45 years.

However, the Bank of England faces a "difficult balancing act" with the banking sector still in a delicate position following the collapse of Silicon Valley Bank and rescue of Credit Suisse.

Referring to the banking turmoil, Sonja Laud, chief investment officer at Legal & General, told BBC Radio 4's Today programme:

Over 70 years and every hiking cycle we have seen in that period, we have never seen a hiking cycle that has not led either to a recession - which is 80pc of the cases - or a financial crisis, or both.

The question always has been why should this time be different?

If you slam on the brakes, the chances are something will break and it is always the weakest links that are flushed to the surface first.

These were unique business cases and challenged business models that we have seen first.

We have to expect more will break simply because we are trying to slow down the economy in order to arrest inflationary pressures.

The expected increase in rates comes despite calls for a pause in the tightening to ease turmoil in financial markets after soaring rates unsettled the banking system.

Ms Laud added:

It is a difficult balancing act. All throughout 2022 we have realised that central banks were quite slow initially and then accelerated the speed of rate hikes because they witnessed a dramatic increase in inflationary pressures.

I think it is the broadening of inflationary pressures that is now worrying them and it is a balancing act.

It is about arresting structural inflationary forces versus slowing down the economy too much.

And it is trying to judge - particularly [amid] the financial stresses that have emerged over the past two weeks - how much they will slow down the economy and how much more they have to raise interest rates in order to facilitate this.

This is painful because it will hit consumers across all the affective areas but at the end of the day it is about the balancing act.

They will do everything and all central banks have been clear in their communication that they will do everything to arrest long term inflationary pressures in order to restore price stability.

08:21 AM

Good morning

The Bank of England faces a "difficult balancing act" as it makes its next decision on interest rates at lunchtime, according to analysts.

Its Monetary Policy Committee is likely to continue the quickest series of interest-rate increases in three decades to quell a inflation that accelerated in February.

However, Sonja Laud, chief investment officer at Legal & General, warned that the efforts to slow down the economy will likely lead to more banks failing as "the weakest links are flushed to the surface first"..

5 things to start your day

1) Federal Reserve raises rates despite banking crisis | The central bank pressed ahead with a 0.25 percentage point rise in a bid to quash stubbornly-high inflation, despite ongoing problems for regional banks.

2) Andrew Bailey warns of ‘moral hazard’ after US bailout of SVB customers | Bank of England governor criticises US officials for protecting all depositors

3) What caused the shock inflation rise – and what it means for interest rates | Surprise jump in prices piles pressure on Bank of England on eve of rates decision

4) London stock market £200bn smaller than Paris | Fears grow that the City is losing its allure amid an exodus of companies

5) Google’s Bard chatbot repeats mistake that wiped $120bn off share price | Tech giant launches chatbot for public trial but admits it will make errors

What happened overnight

Asian markets mostly rose and the dollar retreated, brushing off a Wall Street retreat on hopes the Federal Reserve's latest interest rate rise would be one of its last.

Hong Kong led gains, adding more than 1pc thanks to a rally in tech firms, while Shanghai, Seoul, Taipei, Mumbai, Bangkok and Wellington were also up.

The gains came even as bank chief Jerome Powell dealt a blow to hopes it could cut borrowing costs later in the year to soothe banking sector fears.

In a widely expected move, the Fed raised interest rates by 25 basis points but recast its outlook to a more cautious stance as a result of the banking stress.

Sydney, Singapore and Manila slipped. In Japan, stocks ended lower Thursday, tracking losses on Wall Street.

The benchmark Nikkei 225 index fell 0.2pc to 27,419.61, while the broader Topix index fell 0.3pc to 1,957.32.

Wall Street stocks sank after the Federal Reserve increased interest rates 0.25 percentage points in line with market expectations.

The Dow Jones Industrial Average shed 530.49 points, closing down at 1.6pc at 32,030.11.

The broad-based S&P 500 declined 1.7pc to 3,936.97, while the Nasdaq Composite tumbled 1.6pc to 11,669.96.

In particular, shares in US lenders plummeted after the Federal Reserved warned of tighter lending conditions following recent bank failures and the Treasury Secretary ruled out blanket deposit insurance.

The S&P 500 Banks Industry Group Index dropped 3.7pc to 277.44.

Meanwhile, US Treasury yields slightly retreated as interest rates rose. The two-year yield dropped to 3.96pc, while the benchmark 10-year yield dipped to 3.46pc.

Across the Atlantic, the pound surged against the weak dollar, climbing to a seven week high of $1.23.