No need to delay rate cuts: Bailey should lead from the front and give growth a chance, says ALEX BRUMMER

As a former Bank of England trader who deals with money markets on a daily basis, Andrew Bailey is well aware that these banks do not like surprises.

There is near unanimity among market watchers that the governor and the rest of the nine-member rate-setting Monetary Policy Committee (MPC) will keep the bank’s rate at 5 percent next week after cutting it by a quarter of a percentage point in August.

Current speculation centers on voting patterns: Goldman Sachs expects a 7-2 majority in favor of maintaining the stance, and Morgan Stanley and others, 6-3.

There is some disagreement among analysts over the size of quantitative easing, a policy that reduces the size of the Bank’s balance sheet and tightens policy.

If, as Goldman expects, UK interest rates normalise at 3% next year, why not get on with it? There is nothing in the latest data to give any cause for concern.

Despite public sector wage agreements that are above inflation, average weekly earnings are trending downwards.

There may have been a pick-up in consumer prices in August, but they will not stray far from the 2 percent target.

This week, the European Central Bank decided not to focus on general prices and instead prioritize growth. Rates were cut by a quarter of a percentage point to 3.5%.

The US Federal Reserve, which is due to announce a rate decision on Wednesday, 24 hours before the Bank of England, is also expected to cut rates.

Inflation is no longer the central bankers’ big concern. The current concern is whether monetary medicine has gone too far and will hamper growth.

Signals from Chancellor of the Exchequer Rachel Reeves point to a tough budget to restore public finances. Electoral and political uncertainty, not to mention the dead hand of Labour rhetoric, held back a nascent recovery in July.

The Bank’s role should be to support growth now that supply-side inflation has been overcome. Increasing output is the best way to overcome deficits and debt.

There is currently only one safe vote in the MPC for lower rates, that of LSE associate professor Dr Swati Dhingra, who is likely to be joined by former PM Dave Ramsden.

Many mortgage lenders, looking at future interest rates, have read the rules and started offering better fixed rates to borrowers. The slight-built new governor should take the lead next week and give growth a chance.

Better signals

It is disheartening that Vodafone, once a leader in mobile, is waiting for the Competition and Markets Authority (CMA) to pave the way to future prosperity.

A proposed £15bn merger with Hutchison-owned Three is seen as the best route to rescue the shares, which have fallen 52 per cent in the past five years.

They have enjoyed a minor recovery since Margherita Della Valle took the helm in April 2023. Regulators have been reluctant to approve the deal.

The CMA’s latest message suggests that Vodafone is finally making some progress.

Britain’s overcrowded telecoms space has left it without 5G networks, leaving us near the bottom of the European league table.

Vodafone insists that normal economics do not apply in the telecoms market and that the deal, which creates a company that can compete effectively with EE (owned by BT) and Virgin Media O2, could spark further price competition.

It will offer a better option to third-party operators such as Sky Mobile, Tesco and Lyca Mobile, which piggyback on existing networks. To demonstrate this, Vodafone has committed to telecoms regulator Ofcom to invest £11bn to upgrade networks. Beautiful.

Best snapshots

Are cameras the new chronographs? Readers of fashion magazines will be more than familiar with the increasingly luxurious watch promotions.

The camera market plummeted as mobile phones became increasingly sophisticated. Samsung’s superior camera technology forced Apple to play catch-up with the iPhone 4. Wealthy consumers always want something better.

The Economist reveals there is a waiting list for the new German Leica compact with a base price of around £4,600.

Fujifilm’s premium X100 camera is out of stock and dynamic pricing means it’s changing hands at high multiples of its original £1220 price.

Nikon is back in the photography world with a premium model. It’s time to dust off that old Canon. It could be the next Rolex.