Home Money Now the Bank must cut rates: Bailey needs to lead from the front, as he did at the start of Covid, says ALEX BRUMMER

Now the Bank must cut rates: Bailey needs to lead from the front, as he did at the start of Covid, says ALEX BRUMMER

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Doubtful: The Bank of England's Monetary Policy Committee, overly cautious about setting interest rates, has been waiting for a downward trend in wage agreements before cutting rates.

The Bank of England is not among regulators, including the Competition and Markets Authority and Ofcom, invited by the Treasury Secretary to recall its growth mandate enshrined in law in 2017.

Perhaps Rachel Reeves chose to whisper her belief in expansion to Governor Andrew Bailey on the way back from China as bond yields rose in financial markets.

Reeves cannot be seen as influencing an independent central bank. Nothing would be more likely to excite the wrath of bond watchdogs.

But the Chancellor must know that nothing would produce quicker results in terms of output and confidence than a reduction in the Bank rate from 4.75 per cent in February and a declared path to much lower borrowing costs by the end of the year.

Lower short-term policy rates could encourage a flattening of the yield curve, provide instant relief to borrowers with tracker and variable-rate mortgages, and could ease pressure on businesses facing higher costs as a result of the increase. of employers’ payroll taxes.

Before acting, the Bank’s Monetary Policy Committee, overly cautious in setting interest rates, has been waiting for a downward trend in wage agreements (the public sector is not helping on that front) and a moderation in the prices of the services.

Doubtful: The Bank of England’s Monetary Policy Committee, overly cautious about setting interest rates, has been waiting for a downward trend in wage agreements before cutting rates.

It should also be kept in mind that monetary policy, in the form of interest rates and quantitative tightening (removing the stimulus built up during the pandemic and at the beginning of the Ukraine war), takes time.

The unexpected drop in headline inflation in December to 2.5 percent offers an opportunity for the Bank. Consumer prices are doing better in the United Kingdom than in the United States, where they rose 2.9 percent last month.

Core goods inflation in Britain fell and service price increases fell from 5.01 percent to 4.73 percent.

This decline is no less valid because it was led by a drop in airfares and hospitality. Bailey needs to lead from the front, as he did at the start of Covid-19, and cut hard and fast.

Technology drivers

Currys boss Alex Baldock is one of the most effective voices exposing the extent of Labor’s failings since he took office.

At the electronics specialist, the practical impact of the extra £32m National Insurance costs is that the UK and Nordic retailer is redeploying IT jobs to India.

Baldock calls the false promise of business rates reform “absurd” and is actively lobbying against workplace changes requiring colleagues to be offered guaranteed hours.

Far from protecting workers’ rights, the proposed reforms will make it much more difficult to work with flexible contracts that allow Currys to employ students, semi-retired people, women returning to work and others.

Baldock’s narrative might be less acceptable if he had not delivered. Currys is one such company that successfully overcame an effort by predatory Elliott to drive the retailer out of the London market.

Instead of sinking, Currys shares have almost doubled in the last year, money that would have gone to opportunistic buyers rather than shareholders.

Shares are supported by a recovery in the Nordic countries, strong demand for mobile phones (which have taken a long time to recover) and buoyant sales of computers and games.

Currys says it has captured 75 per cent of the market for AI-enabled computers and mobile phones in the UK.

Baldock just returned from a research and purchasing trip to the US, visiting Nvidia and Microsoft, among others, to help secure the company’s technological advantage.

Profits are rising, forecast to rise 31 per cent on last year, between £145m and £155m, and there is the promise of a dividend increase throughout the year.

It’s been a long time since we’ve heard such optimism from a small group of electronics retailers.

old man profits

There may be rewards for not changing the boss. After 19 years at the helm, JP Morgan’s Jamie Dimon has cemented his reputation as the banker who walks on water.

It has made a staggering £48bn of profits in 2024, an increase of 18 per cent, with trade and deal-making driving the result.

That’s more than the 2024 projections of Britain’s four biggest banks (HSBC, Barclays, NatWest and Lloyds) combined.

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