Hawks fly a lower path as inflation tide begins to turn, says ALEX BRUMMER

Boldness and leadership are not what we expect from the Bank of England, which moves at pedestrian speed.

It was therefore too much to hope that the monetary policy committee responsible for setting interest rates would unite around the views of London School of Economics analyst Swati Dhingra, who twice voted in favor of a 0.25 percentage point reduction in the discount rate from the current 5.25 percent. For.

But there is a really encouraging movement. The two hardliners present at the previous MPC session in February, insider Catherine Mann and Imperial College guru Jonathan Haskel, have been brought to heel.

They joined with Governor Andrew Bailey and others in deciding that the demon of inflation was being slain.

This has been exciting for markets, which now price the chance of a rate cut in June at 65 percent.

The session’s minutes were encouraging enough for government bond yields to ease, which should translate into better home loan deals ahead.

Bailey announces the changes and promises to evaluate at each meeting whether the policy is too restrictive. What is needed is determination and a rate cut next time.

There are encouraging things happening in the economy, as shown by forward-looking indicators such as the S&P Purchasing Managers’ Index.

Services are exceeding expectations and the manufacturing industry is on the mend for the first time since February 2023.

Lloyds Bank remains optimistic about the economic situation, despite concerns over supply routes following Houthi violence in the Red Sea.

Fiscal conditions remain a problem but, as Labor keeps reminding us, the best way to fund a better public sector is to grow the economy.

Fascinatingly, the Bank is not concerned about budget cuts to National Insurance taxes because of a positive supply side effect that will make work pay.

The tone of Federal Reserve Chairman Jerome Powell and Andrew Bailey suggests the tightening has gone too far.

The Swiss National Bank, starting from a very low base, led the way by unexpectedly lowering its key rate by a quarter of a percentage point, to 1.5 percent. The wise men of Zurich know this better.

Olive branches

If only there was a Nationwide or Virgin Money branch on my High Street in south-west London, where NatWest, Barclays and HSBC have closed shop.

Debbie Crosbie and Nationwide, after resisting members’ consultation over the £2.9bn Virgin Money bid, have found a solution that will please everyone.

They commit to leaving the national network of 604 branches intact until 2028 and commit to doing the same for the 91 Virgin Money outlets. Previously, the commitment was until 2026.

Members may not get votes and distributions may not be as generous.

But a big point of difference between the mutual and the commercial banks is that there will be a space where individual customers and small businesses can chat with authorized managers.

It’s a big improvement over banking halls filled with ATMs and tellers who think their job is to teach customers how to use “the app.”

Crosbie was informed that if a membership vote had taken place, it would have been considered a “condition” by the town arbitrator and the entire deal would have been scrapped.

There may be ongoing concerns about Virgin Money’s commercial loan, mortgage and credit card books. Detailed due diligence by Nationwide’s auditors and finance team shows there is nothing untoward to be seen. Let’s hope so.

Next thing…

Simon Wolfson has demonstrated once again that he is Britain’s best retailer.

Subsequent profits in 2023 increased by 5% to £918m. Despite concerns about the impact of rising wages, it forecasts £960m for the current year.

The Conservative Lord tends to underestimate projections and the current year could see Next join the rarefied club of £1 billion revenues. Impressive.