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Are you watching, Andrew Bailey? The European Central Bank (ECB) is not known for its audacity.
But after five years of keeping its key interest rate at 4%, it decided lending conditions are too tight and cut rates by a quarter of a percentage point to 3.75%.
He brushed aside concerns that consumer prices remain sticky, wages continue to rise and service sector costs remain high.
Bank of England Governor Bailey and the monetary policy committee will make their next rate decision on the 20th
Just to underline the bravery of bank president Christine Lagarde’s decision, it came on the day when Dutch voters were the first to go to the polls in the European Parliament elections in 27 countries.
This demonstrates the political independence of the Frankfurt-based bank.
The ECB joins a group of Western central banks, including Canada, Sweden and Switzerland, in seeing the battle against cost of living pressures, caused by Covid supply chain hits and Russia’s war against Ukraine , is over.
In fact, signs of weakness are emerging in the global economy, causing Brent crude oil prices to drop to $77 a barrel.
All this should give Bank of England Governor Bailey and his monetary policy committee (MPC) license to quickly lower rates from the current 5.25 percent to 5 percent on June 20. He has to get on with the job if he wants to follow the IMF. advice and reduce rates to 3.5% this year.
Headline inflation, which has dropped from a high of 11 percent to 2.3 percent, is on the right track. Both the housing market and retail sales are being stifled by unnecessarily strict rates as the MPC over-corrects for its past mistakes.
A cut in the middle of a heated election campaign would underline the Bank’s independence. It would be detrimental to the country if a necessary rate cut were delayed for fear it would be seen as giving the ruling Conservatives an advantage.
A cut would guarantee that the recovery observed in the first quarter of the year is not erased by monetary machismo.
chip bait
Great excitement over chipmaker Nvidia’s valuation rising to $3bn (£2.3bn), making it more valuable than the sleek and ubiquitous Apple.
The surprising aspect of artificial intelligence (AI) pioneer Jensen Huang is that it is a component supplier rather than a product supplier in the manner of Apple or electric vehicle star Tesla.
Nvidia isn’t a name that rolls off the tongue at Pig & Whistle or while browsing Tinder.
When we think of brands of Dyson motors or hair dryers, the names of the component manufacturers are not recorded. AI has become the technology of the moment and is seen as transformative in all aspects of life, from making the NHS work better to speeding up operations in financial markets.
Other potential champions, such as Cambridge-based Arm Holdings, may have the brainpower but have not been effective challengers, leaving Nvidia in a dominant position. It has effectively become the equivalent of 21st century Standard Oil.
A world obsessed with mobile devices and laptops will never be satisfied with the second best technology. The only thing we can expect when we buy a new mobile phone is a more user-friendly design or a better camera.
As the first AI chips make their way into our phones and laptops, it will be a huge leap forward.
Imagine how much faster Tinder will update or you could get one of Labour’s 40,000 extra hospital appointments.
That’s why the Nvidia hype makes so much sense.
rain makers
He almost certainly deserves an honorary knighthood for celebrated American banking hero Jamie Dimon.
There may be doubts in some quarters about his unhelpful comments on the impact on Brexit and his cultivation by French President Emmanuel Macron (a former Rothschild banker).
Still, it can do no harm to the prospects of Rishi Sunak or Chancellor Jeremy Hunt after the election.
There is a long tradition of catapulting former chancellors onto banking boards. The late great tax cutter Nigel Lawson has left for Barclays.
Labor’s Alistair Darling has joined Morgan Stanley. And Sajid Javid has returned to JP Morgan.
Let the doors turn.
