Republican FCC commissioner Simington will step down this week
Simington was confirmed in December 2020 to the five-member FCC after he lead a regulatory effort during President Donald Trump's first term in office seeking to rein in social media companies. Democratic FCC Commissioner Geoffrey Starks said last month he plans to step down in June.
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Donald Trump says Fed chief could be sacked for fraud
Donald Trump has suggested Jerome Powell could be sacked for fraud as pressure builds on the Federal Reserve chairman over a multi-billion dollar renovation of the central bank. Following reports that Mr Trump was preparing to oust the Fed chief, the president told reporters: 'I don't rule out anything but I think it's highly unlikely unless he has to leave for fraud.' The comment appeared to leave the door open for a move against Mr Powell as scrutiny over spending at the Fed intensifies. Last week, Russell Vought, the director of the Office of Management and Budget, which sits within the White House, sent Mr Powell a letter saying Mr Trump was 'extremely troubled' by cost overruns at the central bank. The president has suggested he could use the 'excessive' costs of the Fed's $2.5bn (£1.9bn) renovation as justification for the Fed chair's dismissal. Democratic senator Elizabeth Warren said the president's interest in the renovations was a 'clear pretext' to sack Mr Powell. The Fed chairman and his colleagues have enraged Mr Trump by refusing to cut interest rates as the central bank waits to see the impact of the president's trade war. Mr Trump has ramped up his criticism in recent weeks, calling Mr Powell a 'numbskull' and a 'knucklehead'. The suggestion that the Fed chairman could be ousted for fraud followed earlier reports in multiple US publications stating that the president was likely to sack Mr Powell. The dollar had plunged by as much as 0.9pc and US stocks dropped after articles in Bloomberg, the New York Times and CBS News said the President was on the brink of pushing out the Federal Reserve chairman. US borrowing costs also rose on fears that the Fed's independence would be undermined, hurting its ability to keep inflation under control. Mr Trump asked Republican lawmakers if he should sack Mr Powell on Tuesday night and several people in the room voiced support, according to CBS News. In the meeting, Mr Trump is said to have shown a letter dismissing Mr Powell, the New York Times reported. Separately, a White House official briefed Bloomberg that sacking Mr Powell was 'likely' and could happen soon. Asked about the reports, Mr Trump said: 'I haven't drafted a letter. I talked to them about the concept of firing him. I said: 'What do you think?' Almost every one of them said that I should. But I'm more conservative than they are.' Stocks and the dollar recovered while borrowing costs eased after Mr Trump's White House comments. No Fed chairman has ever been removed by a President in the history of the central bank and analysts warned that doing so would trigger a huge market response. Marcello Estevão, chief economist at the Institute of International Finance (IIF), said: 'It would be an extremely serious shock and could have really seismic repercussions. 'Markets would be pricing in high inflation. I think you would see this event as being equivalent to an oil price shock.' The President threatened to sack Mr Powell in April but then rowed back after the prospect roiled financial markets. Board members including the chairman can be removed in line with the Federal Reserve Act but only 'for cause'. A disagreement with the government over interest rates would not qualify. Mr Powell has said repeatedly he does not intend to step down and would remain in post if the President asked him to resign. Asked about his job security at a conference in April, Mr Powell: 'I fully intend to serve all my term.' Mr Powell's term expires in May 2026. The two frontrunners to succeed him are said to be Kevin Hassett, the director of the National Economic Council, and Kevin Warsh, who was a Fed board member during the financial crisis. 07:43 PM BST Signing off... Thanks for joining us. That's all for this blog for today, but do join us here for all the latest from the Telegraph on business and the economy. 07:40 PM BST Wall Street rises after Trump denial Wall Street has risen this evening after Donald Trump said it was 'highly unlikely' he would fire Jerome Powell in his dispute over interest rates. The Dow Jones is up 0.4pc, while the S&P 500 and Nasdaq are up 0.2pc. 07:29 PM BST Sacking Powell would end up in court, says broker A decision to sack Jerome Powell would end up in the courts, a US-headquartered broker has said. Steve Sosnick, of Interactive Brokers, said: 'The decision to fire Powell would have to make its way through the courts because he can only be fired for cause, and they have to determine if the cost overruns on the new Fed building are grounds for that. 'And now that Trump says he's 'not planning' to fire Powell we have to wonder if the first story [that he planned to fire Mr Powell] was a trial balloon to see how markets would react.' 06:24 PM BST New leadership at Fed 'would be helpful', US House Speaker says The Speaker of the US House of Representatives, Mike Johnson, has said he believes it would be beneficial to have new leadership at the Federal Reserve. 'I do I believe new leadership would be helpful at the Fed,' a Wall Street Journal reporter on X quoted Mr Johnson saying. Punchbowl News, in a separate X post, reported that Mr Johnson said he is 'really not sure' if the president can fire Jerome Powell. 06:14 PM BST Trump eyes next boss of the Fed as axe hangs over Powell After enduring months of Donald Trump's rage, the axe may be finally about to fall on Jerome Powell. The US president is said to have shown a draft letter announcing the sacking of the Federal Reserve chairman during a meeting with House Republicans on Tuesday night and asked their views on whether he should, according to the New York Times. A White House official told Bloomberg he was preparing to axe him, though Trump told a press conference it was 'highly unlikely' he would do anything 'unless he has to leave' because of 'fraud'. He also denied reports of drafting a letter. Discussing Tuesday's meeting with House Republicans, the president said 'almost every one of them' supported the idea of axing Powell. Read the full story... 05:59 PM BST Trump's interest in Fed building renovations 'clear pretext' to fire Powell Democratic senator Elizabeth Warren has said that Donald Trump's interest in renovations of Federal Reserve's headquarters is 'clear pretext' to fire chairman Jerome Powell. Last week, the White House intensified its criticism of how the Fed is being run when the director of the Office of Management and Budget, Russell Vought, sent Powell a letter saying Trump was 'extremely troubled' by cost overruns. 'Nobody is fooled by President Trump and Republicans' sudden interest in building renovations - it's clear pretext to fire Fed chair Powell,' said Ms Warren, the ranking Democrat on the Senate banking committee, which oversees the Fed. 05:49 PM BST Republican warns sacking Powell would undermine US credibility Republican senator Thom Tillis has warned that if Donald Trump were to sack the Fed chairman 'you're going to see a pretty immediate response and we've got to avoid that'. Mr Tillis, a member of the US Senate committee on banking, said that it would undermine US credibility and that ending the Fed's independence would be 'a huge mistake'. 05:45 PM BST Wall Street's 'fear gauge' surged on fears Powell could be sacked Wall Street's 'fear gauge' - known as the Vix - surged as much as 12.1pc today after reports that Donald Trump was about to sack Jerome Powell, the top US central banker. The gauge is currently 3.8pc higher, after Mr Trump said talked down terminating Mr Powell's employment. 05:15 PM BST Trump denies drafting letter to Powell Donald Trump has denied showing House Republicans a draft letter sacking Jerome Powell, the US Fed chairman. 'I haven't drafted a letter. 'I talked to them about the concept of firing him. I said: what do you think? Almost every one of them said that I should. 'But I'm more conservative than they are.' 05:12 PM BST Wall Street pares losses after Trump denial Wall Street has pared losses after Donald Trump said it was 'highly unlikely' he would sack Jerome Powell. Markets had fallen on reports that he was ramping up his campaign against Mr Powell. However, the Dow is now up 0.1pc, the S&P 500 is down just 0.1pc and the Nasdaq is down 0.2pc. The dollar is now down 0.2pc on the day compared with a basket of rivals, having dropped as much as 0.9pc. US Treasury yields have recovered as well. 04:58 PM BST Potential Powell firing hits UK stock market The FTSE 100 closed down this afternoon after reports that Donald Trump could damage the independence of the US central bank by firing is head, Jerome Powell. Dan Coatsworth, investment analyst at AJ Bell, said: 'The UK stock market tried its very best to make progress but wobbled at the end of the trading day amid speculation that Donald Trump has lost patience with Federal Reserve chair Jerome Powell. 'Markets in both the UK and US pulled back amid speculation that Trump was about to fire Powell. He hasn't been shy in expressing displeasure in Powell's decision-making, demanding the Fed bring down rates to help drive economic activity. He wants someone new behind the wheel at the central bank, and someone who will influence looser monetary policy. 'Investors normally like the prospect of rate cuts, yet Trump's potential interference might be a step too far in many people's opinion. There are question marks over Trump's ability to fire Powell over a monetary policy dispute yet it seems where there is a will, there is a way as far as the US president is concerned. The FTSE 100 ended the day 0.1pc down, while the FTSE 250 finished down 0.4pc. 04:34 PM BST Wall Street drops on reports that Powell could be fired Wall Street dropped this afternoon after reports that Donald Trump may be closer to firing Jerome Powell. The main US indexes had been roughly flat. However, the Dow Jones are down around 0.3pc, the S&P 500 is down 0.4pc and the Nasdaq is down 0.5pc. Meanwhile, the cost of US borrowing rose, as measured by 10-year US Treasury notes. The yield had fallen this afternoon to 4.439pc but is now at 4.479pc. 04:21 PM BST White House says Trump likely to fire Powell soon The White House has briefed Bloomberg that Donald Trump is likely to fire US Fed chairman Jerome Powell soon. An official reportedly cautioned that there is no exact timeline for the decision, however. 04:15 PM BST Trump asks Republican lawmakers if he should fire Powell Donald Trump yesterday asked Republican lawmakers if he should fire Fed chairman Jerome Powell, and several people in the room voiced support, CBS News has reported. The meeting with members of the House of Representatives took place at the Oval Office, CBS said. The meeting caused Anna Paulina Luna, a House Republican, to post on X: 'Hearing Jerome Powell is getting fired! From a very serious source.' 03:53 PM BST Fed official warns over watering down bank rules A US Fed board member has warned over watering down bank regulations - something the Trump administration is seeking to do. Michael Barr said: 'It is striking to see the pattern of regulatory weakening during a boom, including the failure of the regulatory environment to keep pace with the evolving financial sector, and how this weakening lays the foundation for a subsequent bust.' In May, the FT reported that the US government was planning to cut the so-called 'supplementary leverage ratio' in what would be a major cut in banks' capital requirements. The current rules were established in 2014 as part of reforms to reduce the risk of another version of the 2008 financial crisis. 03:42 PM BST Wall Street drifts after inflation report US stock indexes are drifting around record levels this afternoon following a better-than-expected update on inflation across the country. The S&P 500, the Dow Jones Industrial Average and the Nasdaq are all flat. Meanwhile, Treasury yields - effectively the cost of US government borrowing - eased in the bond market after a report said inflation slowed by more last month at the wholesale level than economists expected. Meanwhile, ASML, the world's leading supplier of chip-making gear, warned that it cannot guarantee any growth next year, after delivering an expected 15pc growth in sales for 2025. Conditions still look strong for ASML's customers in the artificial-intelligence business, but chief executive Christophe Fouquet said that 'the level of uncertainty is increasing, mostly due to macroeconomic and geopolitical consideration. And that includes, of course, tariffs.' Shares of ASML, which is based in the Netherlands, fell 10.8pc in New York. Stocks of several US banks, however, grew after they reported stronger profits for the latest quarter than analysts expected. 03:30 PM BST Economists slash bets on rate cuts after inflation shock One of Britain's biggest independent stockbrokers has slashed its bets on interest rate cuts after the unexpected jump in inflation. Panmure Liberum said it expects just two more rate cuts from the Bank of England this year after 'particularly noisy' inflation figures. The UK's consumer prices index jumped from 3.4pc in May to 3.6pc in June, according to the Office for National Statistics, amid rising food and petrol prices. The investment bank had expected four cuts but said they were now forecasting reductions in September and November, which would take rates from 4.25pc to 3.75pc. 'UK inflation is simply running too hot for the Bank of England to accelerate its pace of interest rate cuts,' said chief UK economist Simon French. 'Whilst the recent weakness in aggregate demand and hiring should put downward pressure on core inflation on a medium-term view, we can't be deaf to the optics of cutting Bank Rate with inflation running at close to twice the target rate.' 03:16 PM BST Trump threatens tariffs on medicines within weeks Donald Trump has threatened new tariffs on medicines within weeks as he steps up demands for drugmakers to move factories to the US. The president said he would impose tariffs on pharmaceutical imports 'probably at the end of the month', adding: 'We're going to start off with a low tariff and give the pharmaceutical companies a year or so to build, and then we're going to make it a very high tariff.' It follows warnings earlier this month that tariffs could be as high as 200pc for medicines imported into the US. 03:00 PM BST France and Germany push Trump for 'serious' trade deal The French and German finance ministers have urged the United States to hold 'serious and targeted' talks to reach a fair agreement in the US-EU tariff dispute. 'We want serious and targeted negotiations with the United States, that is the position of Germany and France,' Germany's Lars Klingbeil said. He stressed that 'new threats or provocations every day' from the United States 'do not help'. French counterpart Eric Lombard added: 'We continue to reach out, but we will not accept just anything.' The comments came as EU trade chief Maros Sefcovic headed to Washington for tariff talks aimed at averting trade barriers that risk stunting economic growth. An EU spokesman said he will meet US commerce secretary Howard Lutnick and trade representative Jamieson Greer. 02:39 PM BST US stocks rise amid easing wholesale inflation Wall Street's main indexes opened higher after weaker-than-expected wholesale US inflation data indicated Donald Trump's tariffs were not yet hitting businesses. The Dow Jones Industrial Average rose 156.35 points, or 0.4pc, to 44,179.64, the S&P 500 gained 17.45 points, or 0.3pc, to 6,261.21 and the Nasdaq Composite gained 50.34 points, or 0.3pc, to 20,728.14. 02:16 PM BST US wholesale inflation cools despite Trump tariffs US wholesale prices were flat in June, official figures showed, even as businesses grappled with President Donald Trump's wide-ranging tariffs. The producer price index (PPI) was unchanged on a month-on-month basis, beating analysts' expectations and cooling from a 0.3pc rise in May, the Department of Labor said. Wholesale inflation dropped faster than expected from 2.6pc in the year to May to 2.3pc in June, compared to analyst estimates of 2.5pc. The data cover the period before the US president announced an extension to 90-day tariff pause, with negotiations with countries around the world now due to run until August 1. Bradley Saunders of Capital Economics said there were 'fewer signs of tariff effects' in the PPI data. He said: While prices are rising at slower pace than we had expected earlier in the year, President Trump's recent aggression on trade suggests the story is far from over.' 02:00 PM BST Inflation to stay above Bank of England target 'for another year' Inflation will not fall back to the Bank of England's 2pc target until late next year, economists have warned as prices rose faster than expected last month. Interest rates will only be cut once more this year as a result of persistent inflation, according to the National Institute of Economic and Social Research (Niesr). The consumer prices index (CPI) rose to 3.6pc in June, which was its highest level in more than a year, according to the Office for National Statistics. It had been expected to remain unchanged from 3.4pc, where it had stood for the previous two months. Niesr warned that persistent wage growth and increased government spending will add to inflationary pressure this year, as it forecast CPI would remain above 3pc throughout the rest of 2025. Associate economist Monica George Michail said: 'We forecast inflation to remain elevated and only fall back to the 2pc target on a lasting basis by late 2026. 'Nevertheless, we think the Bank of England will implement one further interest rate cut this year.' 01:45 PM BST Inflation to average 3.4pc this year, warn economists Inflation will reach an average of 3.4pc this year, economists have warned, as price rises in the dominant services industry persist. Oxford Economics said UK CPI would peak in September as underlying services data prove 'stickier than anticipated'. However, it expects inflation to 'cool gradually' as pay growth slows along with a decline in the pace of price rises in food and energy. The consultancy said inflation would average 2.7pc next year. Economist Edward Allenby said: 'The positive contribution from the energy category should fade over the final months of this year and into 2026. 'Food price inflation is expected cool as the impact of a stronger pound feeds through. 'And though progress will be gradual, we expect services inflation will cool as pay growth continues to slow and the impact of firms passing on this year's increase in employers' national insurance contributions fades.' 01:23 PM BST Wall Street mixed amid conflicting signs on tariffs US stock indexes came under pressure as investors evaluated how damaging US tariff policies had been on inflation and American companies. The cautious mood in the markets followed Tuesday's US inflation report, which showed prices rose faster than expected amid Donald Trump's tariff onslaught. However, Wall Street's major banks all reported surging profits as their trading desks benefited from the turmoil in markets caused by the US president's trade policy. Money markets indicate the Fed will cut interest rates at least once this year, with a 73pc chance of a second reduction. Deutsche Bank analysts said: 'Even now, the problem is that inflation risks are still being underestimated, with a remarkable complacency across key assets.' In premarket trading, the Nasdaq 100 was down 0.2pc, while the Dow Jones Industrial Average was up 0.2pc. The S&P 500 was flat. 01:01 PM BST Goldman Sachs profits surge as Trump upends markets Goldman Sachs revealed Donald Trump's tariff tirade led to record trading revenues in the second quarter of the year. The Wall Street giant said profits jumped by 22pc as market turmoil boosted trading desks across Wall Street as investors reworked their portfolios amid the chaos. Goldman's equities trading revenue rose 36pc to $4.3bn (£3.2bn), while fixed income, currencies and commodities hauled in $3.5bn, which was 9pc higher than a year ago. A pickup in dealmaking also boosted investment banking, where fees rose 26pc to $2.2bn. Advisory fees were significantly higher due to strength in the Americas and Europe, the Middle East and Africa. Rivals JPMorgan Chase and Citigroup also reported strong trading gains on Tuesday. Goldman Sachs shares rose 1.2pc before the market open. They have climbed 23pc so far this year, making them the fifth best performer in the S&P 500 financial index. 12:42 PM BST Trump tariff turmoil boosts profits at Morgan Stanley Morgan Stanley's profit climbed as market volatility caused by US tariffs buoyed its trading desk. The investment bank posted net income of $3.5bn (£2.6bn), or $2.13 per share, for the three months ended June 30, up from $3.1bn (£2.3bn), or $1.82 per share, a year earlier. Stock markets swung sharply during the quarter after Donald Trump announced sweeping tariffs against major economies. The turbulence spurred trading as investors repositioned their portfolios and hedged risks, driving gains in Morgan Stanley's trading business. Revenue reached $16.8bn in the second quarter, compared with $15bn, a year earlier. Dealmaking rebounded at the end of the quarter as some companies looked past tariff uncertainty and gained confidence to carry out IPOs, mergers and acquisitions. Industry executives held up that optimism this week, anticipating that deals and stock market listings will pick up in the second half of the year. 12:28 PM BST 'I've pretty much given up on this lot': why banks may not help Reeves out Wooing bankers at the Mansion House might not be a Labour chancellor's favourite pastime. But Rachel Reeves has little choice. Her financial plans are in tatters. The economy is sluggish. Her £25bn tax raid on employers has backfired, hammering jobs and pay. And every attempt to hold back the tide of public spending is met with rebellion from her own MPs. She needs to find ways to boost the economy – and with it, tax revenues. Financial services, long one of the main engines of Britain's economy, is one of the few sectors that may be able to make a difference. 12:07 PM BST Traders raise bets on Trump ousting Fed chief Traders are increasingly betting that Donald Trump will find a way to oust the chairman of the Federal Reserve before the end of the year in a move that would risk destabilising financial markets. Prediction market Polymarket, which correctly identified that the US president would win the 2024 election, showed the odds of Jerome Powell being removed from his post jumped to 27pc on Tuesday. It came as Mr Trump again called for the Fed to lower interest rates after data showing what he called 'very low inflation'. Official figures showed that US inflation climbed more than expected from 2.4pc to 2.7pc in June. Mr Trump was forced to backtrack on suggestions earlier this year that he could fire Mr Powell after a spike in US borrowing costs triggered by concerns over the independence of the US central bank. Mr Powell's term as Fed chair is due to end in May next year. 11:56 AM BST House price growth at risk from 'unwelcome' jump in inflation House prices grew could come under threat from the latest surge in inflation, mortgage brokers have warned. Property values rose by 3.9pc on average in the 12 months to May, up from 3.6pc in April, reaching an average of £269,000, according to the Office for National Statistics (ONS). Inflation had climbed to 3.4pc over the two months, up from 2.6pc in March, and analysts said today's inflation figures showing a further rise to 3.6pc could dampen the market. David Hollingworth, associate director at L&C Mortgages, said: 'General anticipation had been that the rate of inflation would remain steady in June, so the increase to 3.6pc is an unwelcome surprise. 'That will raise the question of whether it's enough of a surprise to force the Bank of England to consider a delay to any further cuts in base rate. 'The recent tone has been consistent in its suggestion that interest rates should continue to fall but it's been harder to be sure when those cuts may come, when data doesn't follow the expected path.' Mark Harris, chief executive of SPF Private Clients, said: 'Rate reductions have been playing their part in encouraging buyers and sellers to take the plunge and the markets still expect a further cut in (the Bank of England base rate) next month, even though inflation ticked up in June.' 11:31 AM BST UK debt market left behind by European rivals Britain's government borrowing costs rose despite falls for most major European economies after today's inflation shock. The yield on 10-year UK gilts – the benchmark for the cost of servicing the UK national debt – was last up two basis points to 4.64pc. This is a higher level than that reached after Rachel Reeves's tearful appearance in the Commons earlier this month, which caused a brief bond market shock. Meanwhile, yields for France, Germany, Italy and the US declined, even as American inflation figures on Tuesday showed the first signs that Donald Trump's tariff policy is beginning to push up prices. It was a similar picture for short term two-year bonds and longer-dated 30-year debt. 11:15 AM BST FTSE 100 shrugs off higher inflation The FTSE 100 climbed despite official figures showing inflation jumped unexpectedly in June. The UK's flagship stock index rose by 0.2pc as the rise in CPI did little to bets that the Bank of England will cut interest rates next month. Money markets are pricing about a 90pc chance of a rate cut in August. However, the domestically-focused FTSE 250 was down about 0.1pc as the inflation added to signs of trouble in the UK economy. Nick Lawson, a fund manager at Julius Baer, said: 'Let us not forget the dismal recent performance of the UK economy, with negative growth in both April and May. 'We're sure the Bank of England would dearly love to give borrowers and businesses a break by cutting rates, and that Rachel Reeves would love to see a modicum of her fiscal headroom restored. 'Instead, as tariff and tax impacts seemingly start to bite, Britain teeters on the edge the nastiest of economic nightmares: stagflation. 'The Bank has long talked of 'gradual and careful' rate cuts. Today, the tightrope they walk got a little higher and a little more perilous.' 10:55 AM BST Figures leave Bank of England 'flying blind' on rate cuts Simon French, chief economist at Panmure Liberum, said the Bank of England has been left 'flying blind' on its next interest rate decision amid various conflicting data. While inflation figures have risen unexpectedly, policymakers will also look closely at jobs data tomorrow expected to show unemployment at 4.6pc. Mr French said the latest data made it hard to work out 'what the hell is going on in the UK labour market': 10:20 AM BST Inflation shock to keep interest rate cuts 'cautious and gradual' Policymakers at the Bank of England will remain 'cautious and gradual' about interest rate cuts after inflation jumped unexpectedly last month, according to Barclays. The bank warned about a 'lack of progress' on underlying services, which held firm at 4.7pc in June, above analyst projections of a fall to 4.5pc. UK chief economist Jack Meaning said: 'This tricky print for the Bank of England should keep it cautious and gradual.' He added: 'Governor Bailey has said that he is waiting to see the pass-through of a loosening labour market in inflation data before he can be more committal than gradual, and that is not present in today's print.' Barclays expects interest rates to be cut once a quarter to 3.5pc by February. 10:04 AM BST Reeves's tax raid has 'backfired on working people' Rachel Reeves's tax raid has backfired by raising costs for working people, economists have said. Julian Jessop of the Institute of Economic Affairs think tank said the Chancellor's decision to increase the minimum wage and employer National Insurance contributions was the 'obvious culprit' for the latest jump in inflation. This would 'add to economic uncertainty and the downside risks to spending and investment', he warned. 'The gap between inflation in the UK and the euro area has widened markedly since last October's Budget,' he said. 'The obvious culprit is the continued pass through of higher payroll costs following the large increases in employers' National Insurance contributions and in the national minimum wage. 'It was always likely that these policy choices would backfire on 'working people', both by raising prices and cutting jobs. But they are clearly making the Bank of England's task a lot harder too.' 09:43 AM BST Only two more rate cuts after inflation shock, warns stockbroker The Bank of England will only cut interest rates twice more after official figures showed stronger than expected inflation, a City stockbroker has warned. Peel Hunt said money markets were wrong to be pricing in three cuts by the middle of next year after inflation rose from 3.4pc in May to 3.6pc in June. Chief economist Kallum Pickering said the data 'complicates the near-term policy decisions at the Bank of England' and could derail its forecast for inflation to climb to 3.7pc at some point during the third quarter of the year. He said: 'The question is whether policymakers will write this off as a one-off that merely brings forward the expected jump, or whether it will lead to a further upward revision to the Bank of England projections of 3.5pc in the third quarter and 3.3pc in the fourth quarter.' He added: 'Although money markets have slightly lowered the probability for an August cut, the overall call for a total of three more cuts from the Bank of England – to take the Bank Rate from 4.25pc to 3.5pc by mid-2026 – remains unchanged. 'In our view, this call represents a risk scenario rather than a base case. We expect just two more cuts this year and no cuts thereafter – we look for upside surprises to economic activity to encourage policymakers to stop a little short of what money markets expect.' 09:32 AM BST Ambrose Evans-Pritchard: British debt is a screaming buy British gilts are the most undervalued financial asset on the planet. You would hardly know it from our compulsion to talk the country down but the UK is today one of the least indebted states in the rich world. Companies and households have carried out a massive debt purge since the Lehman crisis. The Bank of England's Financial Stability Report shows that private sector credit has dropped to a quarter-century low of 120pc of GDP from a peak of 165pc at the top of the borrowing bubble in 2008. The public debt-to-GDP ratio has been rising, but the private debt ratio has quietly fallen faster. The two together tell you whether a nation is living within its means. Read why Ambrose Evans-Pritchard thinks UK gilts are a global bargain. 09:10 AM BST UK borrowing costs rise at fastest pace in Europe The cost of government borrowing has risen at the fastest pace in Europe after inflation jumped unexpectedly in June. In a blow for the Chancellor, the yield on 10-year gilts – a benchmark for how much it costs Britain to service the national debt – climbed more than four basis points to 4.67pc. This was around four times the pace of rising yields in Germany and France, which hit 2.72pc and 3.41pc, respectively. Longer term borrowing costs were impacted in a similar way, with the 30-year gilt yield jumping four basis points to 5.49pc. James Flintoft of AJ Bell said: 'The persistence of inflation above 3pc, well ahead of the Bank of England's 2pc target, further highlights the risk that higher inflation is here to stay, and parts of the gilt market need to adjust. 'This comes at a time when there are widespread concerns over the UK's fiscal path, with the Mansion House speech last night providing little clarity on the situation ahead of the Autumn Budget. 'On top of that, a recent report from the Office for Budget Responsibility highlighted that UK pension schemes, typically a strong supporter of the gilt market, are expected to be selling gilts over the next decade, adding upward pressure to gilt yields.' 08:44 AM BST Pound 'vulnerable' amid surge in inflation The value of the pound looks 'vulnerable' despite the latest surge in inflation, according to economists. Sterling was last up 0.1pc against the dollar at just under $1.34 after the unexpected rise in the consumer prices index, which slightly reduced the odds of an interest rate cut in August. Richard Potts, economist at payments firm Bondford, said: 'Stubbornly high inflation in excess of its rich-world peers, along with ever mounting debt concerns, suggest deep rooted problems in the UK economy that will be hard to turn around. This is undercutting the UK's attractiveness to foreign investors and limiting any potential rebound in the pound. 'While the inflation figures were above expectations, they still may not be enough to deter the Bank of England from cutting rates on August 7. Particularly if tomorrow's jobs report provides further evidence of emerging slack in the economy. 'The MPC may choose to look through these inflation figures, which are partially the result of government policy choices and exogenous energy shocks, and instead focus on lacklustre domestic drivers.' He added: 'Beyond that, the next major test for the pound will be the US Fed's July 30 rate announcement. A hawkish response to June's rise in US inflation – which seemingly provided the first evidence of the 'Trump tariff effect' on prices – could prompt the dollar to gain at the expense of other currencies. The pound could be particularly vulnerable due to the UK's deteriorating economic outlook.' 08:28 AM BST UK inflation highest in G7 Britain has the highest inflation in the G7 after official figures showed an unexpected jump in the pace of price rises. The UK consumer prices index (CPI) rose to 3.6pc in June, according to the Office for National Statistics, which was its highest level since January last year. It also meant Britain's inflation rate was the highest in the G7 group of advanced economies in June for the first time in more than a year, according to the Economics Observatory. The figure could change when Japan's inflation figures are published later this month. Its inflation is forecast to drop to 3.3pc. 08:08 AM BST What higher inflation means for mortgages, savings and investments Inflation jumped unexpectedly to 3.6pc in June, up from 3.4pc in May, despite hopes price growth would slow. Transport, particularly the cost of petrol, made the largest upward contribution to the increase, according to the Office for National Statistics (ONS). Food and beverage costs also rose. News of the surprise increase to could mean we're less likely to see multiple Bank of England rate cuts this year as the figure is still well above the central bank's 2pc target. The Bank of England held interest rates to 4.25pc in June, but economists still it to cut its headline rate at the next decision on 7 August. This could have a significant impact on your finances – including savings, mortgages and investments. Here, Telegraph Money explains what your options are. 08:04 AM BST UK stocks mixed after higher inflation The UK stock market lacked direction at the start of trading after inflation came in higher than expected in June. The FTSE 100 rose 0.1pc to 8,944.82 while the domestically-focused FTSE 250 fell 0.2pc to 21,638.20. 08:02 AM BST Inflation rises faster than Bank of England projections Inflation rose faster than the Bank of England forecast in the second quarter of the year, official figures show. The Bank of England had predicted in May that CPI would rise by 3.4pc in the three months to June. However, the latest inflation blow meant that second quarter inflation reached 3.5pc, in line with the Bank's earlier predictions in February. Adam Deasy, economist at PwC, said: 'Although this leaves quarterly inflation slightly higher than the Bank of England's expectations set out in May, wage growth has since fallen some way below the Bank's expected path and should cool further; with services inflation staying flat at 4.7pc in June, this should bring some reassurance that some of the underlying inflationary drivers are on the right track. 'While price growth remains far above target, the UK economy contracting for a second straight month in May means the Bank is likely to look through the volatility in this inflation reading and proceed with a rate cut in August. 'Tomorrow's payroll data release, the last major data release before the next MPC meeting, may spark the Bank into action to support an economy that increasingly looks like it needs a lift.' 07:57 AM BST Case is weakening for interest rate cuts, warn analysts The Bank of England is still expected to cut interest rates in August but analysts said the case is weakening after the latest inflation figures. Guy Foster, strategist at RBC Brewin Dolphin, said: 'This was unhelpful news for the Bank of England, which wants to cut interest rates to support growth. 'If interest rates don't come down, the government interest bill will be higher and the pressure for higher taxes will become more acute.' He added: 'An interest rate cut in August still seems likely but the case is weakening.' Neil Birrell of Premier Miton Investors said: 'Just when the Chancellor is trying to generate some good news, UK inflation unexpectedly quickened in June, back up to an annual rate of 3.6pc, with the core rate at 3.7pc. 'If the Bank of England is keeping a close eye on unemployment as a key indicator for policy, inflation has jumped to the head of the queue again. 'As inflationary tariffs are coming in worldwide, the UK economy's propensity for inflation is an issue.' Michael Metcalfe of State Street Markets offered words of encouragement. He said: 'Online prices had warned of a firmer UK inflation print in June, with the potential to challenge the growing consensus for multiple rate cuts later this year. 'Nevertheless, the same online prices suggest inflation pressures have already begun to subside in the first two weeks of July, which warns against reading too much into summer inflation strength seen so far.' 07:34 AM BST Inflation jumps in blow to Reeves Inflation jumped by more than expected in June to its highest level in more than a year, in the latest blow to embattled Chancellor Rachel Reeves. Figures from the Office for National Statistics show that consumer prices rose by 3.6pc in the 12 month to June, up from 3.4pc in May. This is the highest since February last year. The rise was 0.2 percentage points above analyst expectations and makes it more difficult for the Bank of England to cut rates quickly despite the fragile state of the economy. It comes as the job market is struggling, with hiring retreating to 2015 levels in the face of big jumps in the minimum wage and Ms Reeves' £26bn tax raid. The ONS said the jump in inflation was driven by transport costs falling less than a year ago, in particular motor fuels, and higher food prices. It comes after the war between Israel and Iran prompted a spike in oil prices, which has since fallen although they remain higher than at the start of June. Flight tickets also rose by 7.9pc between May and June, the highest rise this time of year since 2018. Richard Heys from the ONS said: 'Food price inflation has increased for the third consecutive month to its highest annual rate since February of last year. 'However it remains well below the peak seen in early 2023.' Food prices have risen every month since Ms Reeves' national insurance tax raid on employers took effect in April. They were up by 4.5pc in the year to June, from 4.4pc in May. It follows warnings from retailers since the autumn Budget that this would be the inevitable consequence of surging employment costs. 07:32 AM BST Traders bet on August rate cut despite higher inflation Traders remain confident that the Bank of England will cut interest rates next month despite the jump in inflation. Money markets indicate there is an 87pc chance that policymakers will lower borrowing costs in August, down from an 89pc probability on Tuesday. Derivatives trades indicate the Bank will cut rates one more time by the end of the year. Suren Thiru, economics director at ICAEW, said: 'June's uptick is the start of a slight summer surge in inflation with skyrocketing business costs and global trade turbulence likely to lift the headline rate moderately higher by the autumn, despite July's drop in energy bills. 'While June's hot inflation won't deter policymakers from sanctioning an August policy loosening, given mounting worries over economic conditions, these figures may increase caution over the pace of future rate cuts.' 07:25 AM BST Bank of England 'irresponsible' to cut rates, says ex-official One of the Bank of England's former policymakers said it would be 'irresponsible' for it to cut interest rates after the jump in inflation. Andrew Sentance, who sat on the Monetary Policy Committee from 2006 to 2011, said: 07:20 AM BST Pound rises after inflation blow The value of the pound rose after the unexpected jump in inflation, which complicates the picture for the Bank of England at its next meeting on interest rates. Sterling was up 0.2pc versus the dollar at $1.34, although it remained flat against the euro, which was worth 86.7p. David Morrison, analyst at Trade Nation, said: 'Once again, the UK inflation numbers are going in the wrong direction. 'Sterling jumped on the news suggesting that the Bank is going to struggle to justify a rate cut next month.' 07:16 AM BST Working people are still struggling, says Reeves Rachel Reeves said she was 'determined' to put more money in people's pockets after official figures showed inflation jumped unexpectedly last month. The Chancellor said: 'I know working people are still struggling with the cost of living. 'That is why we have already taken action by increasing the national minimum wage for three million workers, rolling out free breakfast clubs in every primary school and extending the £3 bus far cap. 'But there is more to do and I'm determined we deliver on our Plan for Change to put more money into people's pockets.' 07:13 AM BST Food inflation climbs to one-year high Food inflation has increased for a third month in a row to its highest level in more than a year at 4.5pc, the ONS said. Acting chief economist Richard Heys said: 'Inflation ticked up in June driven mainly by motor fuel prices which fell only slightly, compared with a much larger decrease at this time last year. 'Food price inflation has increased for the third consecutive month to its highest annual rate since February of last year. 'However, it remains well below the peak seen in early 2023.' 07:08 AM BST Good morning Thanks for joining me. Inflation rose unexpectedly last month, official figures show, in a troubling sign for policymakers at the Bank of England. The consumer prices index (CPI) rose to 3.6pc in June, which was its highest level in more than a year, according to the Office for National Statistics. It had been expected to remain unchanged from 3.4pc, where it had stood for the previous two months. The rising cost of motor fuels was the largest contributor to the jump in CPI, although core inflation which strips out volatile food and energy prices jumped from 3.5pc to 3.7pc. Acting chief economist Richard Heys said: 'Food price inflation has increased for the third consecutive month to its highest annual rate since February of last year.' The data potentially complicates the picture for the Bank of England, which markets had expected to cut rates in August. Governor Andrew Bailey had indicated this week that policymakers might look past inflation data when they said they would lower borrowing costs if they begin to see signs of weakness in the jobs market. Here is what you need to know. 5 things to start your day Red tape is 'boot on the neck of businesses', says Reeves | Chancellor urges regulators to ditch 'excessive caution' and rewrite rules for banks Bank of England chief attacks 'dangerous' Trump tariff war | US and China can take action at home instead of resorting to a trade war, says Bailey Reeves accused of 'sacrificing' consumer rights to boost the City | Martin Lewis criticises plans to make mis-selling compensation harder to claim Reeves forced to plead with bankers to boost growth | With a stalling economy and financial plans in tatters, the Chancellor must woo the City Ambrose Evans-Pritchard: British debt is a screaming buy | Mispriced, overlooked and poised for a major reappraisal – UK gilts are a global bargain What happened overnight Shares in Asia traded mixed after higher-than-expected US inflation pulled most Wall Street stocks lower. Tokyo's Nikkei 225 gained 0.2pc to 39,752.06 as the dollar rose against the Japanese yen, trading near 149 yen. Investors are focused on the potential impact of an election for the Upper House of Parliament on Sunday that is expected to lead to tax cuts and higher spending as lawmakers try to restore the waning popularity of the ruling Liberal Democrats. Worries over a deterioration in Japan's fiscal health have pushed yields of long-term Japanese government bonds to their highest levels in years. Elsewhere in Asia, Hong Kong's Hang Seng was flat at 24,599.40 while the Shanghai Composite index slipped 0.2pc to 3,498.11. South Korea's Kospi lost 0.9pc to 3,187.04 and in Australia, the S&P/ASX 200 declined 0.7pc to 8,566.60. Taiwan's Taiex jumped 0.9pc to 23,042.90 and India's Sensex gave up 0.2pc to 82,386.98. Thailand's SET was little changed at 1,161.25. Wall Street stocks finished mostly lower last night, despite another Nasdaq record. The Dow Jones Industrial Average dropped 1pc, to 44,023.29. The broad-based S&P fell 0.4pc, to 6,243.76, while the tech-rich Nasdaq gained 0.2pc, to finish at an all-time record at 20,677.80. In the bond market, the yield on 10-year US Treasury notes rose to 4.488pc from 4.438pc on Monday night. Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
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Canada eyes Mercosur trade pact to reduce US reliance, minister says
By Promit Mukherjee OTTAWA (Reuters) -Canada's International Trade Minister said on Thursday that there was interest from both sides to advance trade talks with South American bloc Mercosur, as Ottawa seeks new deals in a push to diversify from the U.S. Prime Minister Mark Carney and his team have been locked in talks with U.S. President Donald Trump to hash out a trade deal by August 1, which could help reduce tariffs on Canada. But his government is also preparing to rely less on a relationship that generated bilateral trade of over C$1 trillion ($727.33 billion) last year and to focus on diversifying trade by signing free trade pacts globally. "I had conversations with the foreign minister of Brazil, and there is appetite to carry out conversations around Mercosur," Minister Maninder Sidhu said in an interview with Reuters. Brazilian President Luiz Inacio Lula da Silva had said in April that he was interested in advancing talks for a trade deal between South America's Mercosur bloc and Canada. Mercosur - which includes Brazil, Argentina, Paraguay and Uruguay - has had negotiation rounds for a trade deal with Canada in the past. Canada is also keen to continue talks with China to address trade challenges and views a thawing of relations between India and Canada as an important step to support trade, the Minister said. "With China, there are opportunities, there are challenges," he said, adding that the countries are holding frank discussions on a path forward on trade tariffs around exports of canola, beef, pet food and many other products. Canada has 15 free-trade deals covering 51 countries, giving it access to 1.5 billion consumers and Sidhu said that Ottawa will be pursuing more such deals in the coming months without giving a specific target. He had signed a free trade deal with Ecuador and an investment promotion pact with the UAE in his first two months in office and said discussions are on with the ASEAN countries and also individually with countries in the Indo-Pacific, including Indonesia and the Philippines. OVER-EXPOSURE Sidhu said Canadian companies are over-exposed to the U.S. and they are not as competitive as they used to be due to Trump's tariffs. "My job is to be out there opening doors," he said, adding that he would seek to diversify not only trade but Canada's defense procurements from the U.S. Carney has promised to increase defense spending by an additional C$9 billion this year to meet NATO's target of spending 2% of GDP. "We are working with the European Union and other partners around the world to help unlock some of those procurement opportunities in defense for our Canadian companies," he said. Canadian exports to the U.S. dropped in May to 68% of total exports from a monthly average of 75% last year. The U.S. share in May was the lowest on record as companies pushed to diversify from the U.S. He did not respond directly on what a trade deal between Canada and the U.S. would look like, but said the government would "work towards a deal that's best for Canadian businesses and Canadian workers." Sign in to access your portfolio
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Citi, Ant International pilot AI-powered FX tool for clients to help cut hedging costs
SINGAPORE (Reuters) -Citigroup and Singapore-based financial technology firm Ant International have launched a pilot program using artificial intelligence to help clients better manage foreign exchange risk, the companies said on Friday. The program combines Citi's Fixed FX Rates solution, which is widely used by the banks' clients in sectors such as e-commerce, with Ant International's Falcon Time-Series Transformer model, an AI forecasting tool that helps businesses reduce hedging FX costs, according to a joint statement. The pilot program, developed initially for aviation clients, has already been used in live transactions with a major Asian airline able to reduce cost in its fixed FX hedging for online ticket sales, the companies said. "The 30% hedging cost savings Ant International has achieved for the pilot airline customer shows the cost efficiency that can be achieved with AI-enabled FX hedging," Kelvin Li, general manager of Platform Tech at Ant International, said. "We are excited to expand the solution with Citi to serve more businesses and industries," he added. Ant International is an affiliate of China's fin tech giant Ant Group, founded by billionaire Jack Ma. It provides global digital payment, digitisation and financial technology and has operations across Asia, Europe, the Middle East and Latin America. The launch came six months after Citi began rolling out new AI tools to be used by employees in eight countries, providing such access to 140,000 employees globally. Large banks have been using AI tools in more targeted ways. Morgan Stanley has a chatbot that helps financial advisors in interactions with clients, and Bank of America's virtual assistant Erica focuses on day-to-day transactions of retail clients. Sign in to access your portfolio
