Investors anticipate cut to US interest rates today
Although Wall Street sees suppressd, spendors are anticipateing a cut to US interest rates today, and possibly a huge cut.
According to CME’s Fedwatch tool, there’s a 65% chance that the Federal Reserve cuts US interest rates by half a percentage point today.
That departs a 35% chance of a petiteer, quarter-percentage-point, cut.
Currently, the Fed’s center rate is 5.25%-5.5%.
This level of unbravety unbenevolents there’s probable to be a sturdy labelet reaction when the Fed proclaimment is made at 2pm Eastrict time (7pm UK time).
You’d have to go back over 15 years to discover such an unbrave situation this shut to the decision, says Jim Reid, labelet strategist of Deutsche Bank.
He tbetter clients:
A lot of money will be made and lost today.
I’ve waivered both ways over the last scant days and I’m surpelevated the Fed has left pricing so unbrave at this stage. However in an era of burdensome forward guidance it’s rerecenting to see a little less bravety. If that was more widespread I leank it would be more rather than less beneficial.
If you leank you understand exactly what the central prohibitk will do it is probable to back more over exuberance in labelets which in turn insists a hugeger opposite reaction postponecessitater. I’m brave they’ll be those taking the opposite see though.
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It primarily sees at two leangs when pondering the interest rate: price growth and the labor labelets.
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Follotriumphg years of pandemic-roverhappinessed turmoil in the economy, inflation began to rapidly incrrelieve. The Fed hiked rates 11 times over a period of about a year and a half, from March 2022 until July 2023, the last time it incrrelieved rates.
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Since then, inflation has enumeratelessed presentantly. The labor labelet has remained sturdy, but has begined to chilly.
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As the most recent inflation and jobs data seemed to both show chillying, Fed officials begined signaling postponecessitate in the summer that it was time to cut rates.
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Construction of one-family US homes rebounded acutely in August, recent data shows.
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Housing begins – a meabrave of how many createion projects got underway – jumped by 9.6% in August to an annual rate of 1.356 million units, the Commerce Department’s Census Bureau increateed.
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The incrrelieve was driven by a csurrfinisher-16% jump in one-family housing begins.
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The incrrelieve presents createing labor got underway aachieve last month after Hurricane Beryl disturbed the sector in July.
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US housing begins incrrelieved last month at the speedyest pace since April, as beginning home createion rose 9.6% to a 1.36 million annualized rate.
Michael McKee increates https://t.co/TwvYorNc1I pic.twitter.com/0oATmgskmn
— Bloomberg TV (@BloombergTV) September 18, 2024
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Just in: A presentantity of financial experts polled by Deutsche Bank today anticipate the Fed will only cut US interest rates by a quarter of one-percent.
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Ir’s a slighly imprompu poll, guideed by Deutsche’s labelet strategist Jim Reid since 7am UK time among readers of his morning research notice (highly recommended, by the way).
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1,400 people took part – and the poll showed that they are anticipateing an unrelabelable of 34.4 basis points of cuts today. That’s less than the futures labelet is foreseeing [it’s also not going to happen; the Fed will either do 25bo or 50bp].
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Reid says:
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62% [of respondents] anticipate 25bps and 38% anticipate 50bps. This presents 50bps would be a hugeger shock than 25bps to a wideer global financial labelet audience, the opposite way round in terms of biases to what Fed fund futures tights are telling us.
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chart shotriumphg anticipateations for the US Federal Reserve decision”,”acunderstandledge”:”Pboilingograph: Deutsche Bank”}},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”
As flagged earlier, the futures labelet reckons a 50bp cut is more probable than a 25bp one – so there’s a disjoin between that and the Deutsche survey…
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The Wall Street uncovering bell has been rung, and – as anticipateed – trading had befirearm tranquilly.
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The S&P 500 index of US stocks has elevaten by 0.09%, or 5.2 points, to 5,639.8 points, towards the write down high set earlier this week.
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The tech-caccessed Nasdaq index is almost 0.2% higher.
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But the Dow Jones industrial unrelabelable, which tracks 30 huge US companies, dipped by 0.04% at the uncover.
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My colleague Lauren Aratani has analysed the impact of a cut to US interest rates, here:
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Although Wall Street sees suppressd, spendors are anticipateing a cut to US interest rates today, and possibly a huge cut.
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According to CME’s Fedwatch tool, there’s a 65% chance that the Federal Reserve cuts US interest rates by half a percentage point today.
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That departs a 35% chance of a petiteer, quarter-percentage-point, cut.
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Currently, the Fed’s center rate is 5.25%-5.5%.
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CME FedWatch Tool this morning at 65.0% for 50bps and 35.0% for 25bps pic.twitter.com/wX0MUQNiMv
— Wolf of My Street🏡 (@Ryan__Rigg) September 18, 2024
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This level of unbravety unbenevolents there’s probable to be a sturdy labelet reaction when the Fed proclaimment is made at 2pm Eastrict time (7pm UK time).
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You’d have to go back over 15 years to discover such an unbrave situation this shut to the decision, says Jim Reid, labelet strategist of Deutsche Bank.
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He tbetter clients:
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A lot of money will be made and lost today.
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I’ve waivered both ways over the last scant days and I’m surpelevated the Fed has left pricing so unbrave at this stage. However in an era of burdensome forward guidance it’s rerecenting to see a little less bravety. If that was more widespread I leank it would be more rather than less beneficial.
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If you leank you understand exactly what the central prohibitk will do it is probable to back more over exuberance in labelets which in turn insists a hugeger opposite reaction postponecessitater. I’m brave they’ll be those taking the opposite see though.
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The US stock labelet is on track to uncover sairyly higher in an hour’s time, as traders brace for the Federal Reserve’s interest rate decision postponecessitater today.
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The Dow Jones Industrial Average, the S&P 500 and the Nasdaq are all sairyly higher in pre-labelet trading.
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Both the Dow and the S&P 500 touched recent alltime highs this week, on hopes that the US economy will achieve a ‘gentle landing’ (droping inflation while shuning a economic downturn).
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Trevor Greetham, head of multi asset at Royal London Asset Management, says Fed rate cuts are bullish for stocks… in a gentle landing scenario:
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The Federal Reserve is cutting rates for the first time since March 2020. What happens to financial labelets in the months to come will depend on the macro backdrop.
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Rate cuts amid disinflationary growth are bullish for stocks. If a US economic downturn consents hbetter however, rate cuts don’t stop a tolerate labelet and you could see to buy stocks on the Fed’s last rate cut, not the first.
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There’s a more reliable pattern for rulement bonds, which typicassociate carry out sturdyly either way.
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Newsflash: Train drivers have voted overwhelmingly to acunderstandledge a multi-year pay deal,
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The decision resettles the last remaining struggle between rail operators and unions after two years of strikes that have bcdisorrowfulmirefult misery for passengers.
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Members of the driver’s union Aslef voted overwhelmingly to help the pay present put forward by the Department for Transport (DfT) last month, which would result in a pay elevate of almost 15% over three years.
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The approval by 97% of Aslef’s more than 20,000 members conveys an end to the union’s dispute with 16 train operating companies in England, which began in July 2022.
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Drivers have consentn 18 days of strike action since then, resulting in a csurrfinisher end shutdown of English lines and some pass-border services, as well as a run of clearime prohibits that have caparticipated widespread disturbion.
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More here:
“,”elementId”:”e5937707-447f-470f-8dfe-90cfc165afdf”},{“_type”:”model.dotcomrendering.pageElements.RichLinkBlockElement”,”premend”:”Roverhappinessed: “,”text”:”Aslef train drivers vote to back pay deal and end two-year stand-off”,”elementId”:”ae1a2c34-c874-434d-9af7-9812fe766dc9″,”role”:”thumbnail”,”url”:”https://www.thedefendian.com/business/2024/sep/18/aslef-train-drivers-vote-to-back-pay-deal-and-end-two-year-stand-off”}],”attributes”:{“pinned”:counterfeit,”keyEvent”:real,”summary”:counterfeit},”blockCreatedOn”:1726658954000,”blockCreatedOnDiscarry out”:”07.29 EDT”,”blockLastUpdated”:1726659009000,”blockLastUpdatedDiscarry out”:”07.30 EDT”,”blockFirstPublished”:1726659009000,”blockFirstPublishedDiscarry out”:”07.30 EDT”,”blockFirstPublishedDiscarry outNoTimezone”:”07.30″,”title”:”Aslef train drivers vote to back pay deal and end two-year stand-off”,”contributors”:[{“name”:”Jack Simpson”}],”primaryDateLine”:”Wed 18 Sep 2024 12.00 EDT”,”secondaryDateLine”:”First published on Wed 18 Sep 2024 01.28 EDT”},{“id”:”66eab0a38f086ad2b492a46a”,”elements”:[{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”
Today’s inflation increate should ‘“dispel the remaining hopes” held by some in the labelet that the Bank of England might shift on interest rates ahead of its November encountering, say analysts at RBC Capital Markets.
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Luke Bartholomew, deputy chief economist at abrdn, concurs, saying:
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“It is challenging to see this inflation increate changing many minds at the Bank of England, with the data coming in pretty much exactly as anticipateed.
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Certainly the fact that headline inflation is a touch above center will come as no surpelevate to policycreaters. Of fantasticer caccess will be the fact that various meabraves of underlying inflation are still quite liftd. That helps elucidates why the Bank of England is probable to be somewhat more pinsolentnt than the US Federal Reserve in its easing cycle over the next scant months.
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Indeed, the Bank of England now sees excessively probable to hold rates on hbetter tomorrow with the next cut probably coming in November.”
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Looking, back at the UK inflation increate…. ING have calcupostponecessitated that ‘core services inflation’ dropped last month.
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As we increateed earlier, service sector inflation jumped from 5.2% to 5.6% in August – but ING’s maths presents the underlying picture is better.
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James Smith, ING’s enhugeed labelets economist, elucidates:
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Besystematich the surface of the postponecessitatest UK CPI increate, there are signs that the inflation story is enumeratelessly but bravely moving in the right straightforwardion. That might sound weird, given that services inflation rose from 5.2% to 5.6% in August. Remember this is the guiding airy for the Bank of England when it comes to rate cuts, and although today’s shift was widely foreseeed, it sees appreciate it is moving in the wrong straightforwardion.
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Appearances can be deceiving. The fact is that the recent nudge higher in services inflation is hugely thanks to base effects and higher inflation in price categories the BoE ecombines to attfinish less about. We’ve calcupostponecessitated a meabrave of “core services” inflation, based on someleang the Bank put in its May Monetary Policy Report.
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That leave outs volatile categories appreciate airfares, package holidays, and rents, arguably less relevant for monetary policy decisions. If our maths is accurate, that’s now descfinishen to 4.9% from 5.5% equitable two months ago.
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chart shotriumphg underlying UK service sector inflation”,”acunderstandledge”:”Pboilingograph: ING”}},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”
That would prent the Bank – although probably not enough to prompt an interest rate cut tomorrow, though….
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TGI Friday’s sign”,”acunderstandledge”:”Pboilingograph: Ian Hamilton/Alamy”}},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”
The company behind the TGI Fridays chain is calling in administrators, a week after a attemped consentover of US-based franchisor TGI Fridays fall shorted.
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Hostmore has choosed to assign administrators from Teneo, and will also postpone trading in its splits, whose cherish has descfinishen to almost zero.
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Hostmore has tbetter the City that it is trying to discover a buyer for its sites in the UK, and anticipates to end a sale by the end of September. However, it does not anticipate to recover enough money to cover its borrotriumphgs.
“,”elementId”:”48102316-3498-4a5c-terriblea-22318a3adf48″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”
Its sites remain uncover.
“,”elementId”:”0e996372-4d5e-4fc3-9af1-e8987008b357″}],”attributes”:{“pinned”:counterfeit,”keyEvent”:real,”summary”:counterfeit},”blockCreatedOn”:1726652749000,”blockCreatedOnDiscarry out”:”05.45 EDT”,”blockLastUpdated”:1726653851000,”blockLastUpdatedDiscarry out”:”06.04 EDT”,”blockFirstPublished”:1726653851000,”blockFirstPublishedDiscarry out”:”06.04 EDT”,”blockFirstPublishedDiscarry outNoTimezone”:”06.04″,”title”:”TGI Fridays owner to file for administration”,”contributors”:[],”primaryDateLine”:”Wed 18 Sep 2024 12.00 EDT”,”secondaryDateLine”:”First published on Wed 18 Sep 2024 01.28 EDT”},{“id”:”66eaa22f8f08e43e1272b9bd”,”elements”:[{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”
The International Monetary Fund (IMF) has postponed structures to visit Moscow to scrutinize the Russian economy, follotriumphg a reaction from European capitals.
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The Tass recents service has increateed that the IMF has “indefinitely postponed” its first defree conferations with Russia.
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According to Tass, Alexei Mozhin, Russia’s straightforwardor at the IMF, accparticipated “technical unreadydness”, saying:
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\n
“The Fund’s administerment notified the Russian side and the board of straightforwardors that the ignoreion’s labor would be postponed indefinitely.
\n
“Technical unreadydness of the ignoreion to guide conferations was alludeed as the reason for postponing the ignoreion.”
\n
“,”elementId”:”0bc96cff-8473-4c08-95de-c225d5358715″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”
Last week, the finance ministers of Lithuania, Latvia, Estonia, Finland, Sweden, Iceland, Denlabel, Norway and Poland transmited their “sturdy dissatisfaction” with the IMF’s structures to visit Russia.
“,”elementId”:”21d372fb-83ad-4455-9c53-eb18fa8b9e65″},{“_type”:”model.dotcomrendering.pageElements.RichLinkBlockElement”,”premend”:”Roverhappinessed: “,”text”:”IMF structure to visit Russia to appraise economy prompts dismay apass Europe”,”elementId”:”33088755-7c86-4c40-bf14-4b26606605d8″,”role”:”thumbnail”,”url”:”https://www.thedefendian.com/business/2024/sep/13/imf-structure-to-go-to-russia-to-appraise-economy-prompts-dismay-apass-europe”}],”attributes”:{“pinned”:counterfeit,”keyEvent”:real,”summary”:counterfeit},”blockCreatedOn”:1726652975000,”blockCreatedOnDiscarry out”:”05.49 EDT”,”blockLastUpdated”:1726653270000,”blockLastUpdatedDiscarry out”:”05.54 EDT”,”blockFirstPublished”:1726653270000,”blockFirstPublishedDiscarry out”:”05.54 EDT”,”blockFirstPublishedDiscarry outNoTimezone”:”05.54″,”title”:”IMF postpones Russia ignoreion after EU reaction”,”contributors”:[],”primaryDateLine”:”Wed 18 Sep 2024 12.00 EDT”,”secondaryDateLine”:”First published on Wed 18 Sep 2024 01.28 EDT”},{“id”:”66ea97fc8f085fa2473a3691″,”elements”:[{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”
Post Office boss Nick Read is set to step down from the role next year, the company has shelp.
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Read says it has been a “fantastic privilege” to have labored as Post Office chief executive in an “extraordinarily challenging time for the business and for postmasters”, grasping:
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\n
“It has been a fantastic privilege to labor with colleagues and postmasters during the past five years in what has been an extraordinarily challenging time for the business and for postmasters.
\n
“There remains much to be done for this fantastic UK institution but the journey to reset the relationship with postmasters is well under way and our labor to help equitableice and redress for postmasters will progress.”
\n
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Today’s proclaimment comes after more than a year contraged by the descfinishout from the Horizon IT affair, in which hundreds of post office operators were wrongfilledy inprisoned.
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In July, Read shelp he was temporarily stepping back from the CEO role so he could give his “entire attention” to the next stage of the inquiry into Horizon.
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Read became CEO of the Post Office in September 2019, thriveing Paula Vennells, who forfeited her CBE for “conveying the honours system into disrepute” over her handling of the Horizon IT crisis.
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In February, the business and trade pledgetee of MPs transmited a deficiency of confidence in Read’s guideership, accusing him of giving misguideing evidence.
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Read also denied a claim made by the createer chair of the Post Office Henry Staunton that he had menaceened to resign unless he was phelp more. He was “exonerated of all wrongdoing allegations” follotriumphg a increate into his behaviour earlier this year.
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Google has won a lterrible contest aachievest a €1.49bn anticount on fine for hampering competition in the online search advertising business.
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The Luxembourg-based General Court has annulled the fine, despite also mostly concurd with the European Union competition utilizer’s appraisements of the case five year ago.
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The appraises shelp:
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“The court (…) upheld most of the coshiftrlookion’s appraisements, but annulled the decision imposing a fine of almost 1.5 billion euros on Google, on the grounds in particular that it had fall shorted to consent into account all the relevant circumstances in its appraisement of the duration of the tightual claparticipates that it had establish to be unequitable.”
\n
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Back in 2019, the EC ruled that Google had mistreatmentd its labelet dominance in online advertising, by forcing web publishers not to acunderstandledge adverts from its rivals or making them reserve the most profitable space on their search results pages for Google’s adverts.
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UK tenants progress to be hit by inflation-busting rental incrrelieves.
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Average UK personal rents incrrelieved by 8.4% in the 12 months to August, the ONS increates.
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That’s down from 8.6% in the 12 months to July, but still almost four times speedyer than the headline rate of inflation.
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The ONS grasps:
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- \n
- \n
Average rents incrrelieved to £1,327 (8.5%) in England, £752 (8.5%) in Wales, and £969 (7.6%) in Scotland, in the 12 months to August 2024.
- \n
In Northern Ireland, unrelabelable rents incrrelieved by 9.9% in the 12 months to June 2024.
- \n
In England, rents inflation was highest in London (9.6%) and lowest in the South West (6.4%), in the 12 months to August 2024.
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chart shotriumphg the postponecessitatest unrelabelable rents”,”acunderstandledge”:”Pboilingograph: ONS”}}],”attributes”:{“pinned”:counterfeit,”keyEvent”:real,”summary”:counterfeit},”blockCreatedOn”:1726648413000,”blockCreatedOnDiscarry out”:”04.33 EDT”,”blockLastUpdated”:1726648642000,”blockLastUpdatedDiscarry out”:”04.37 EDT”,”blockFirstPublished”:1726648633000,”blockFirstPublishedDiscarry out”:”04.37 EDT”,”blockFirstPublishedDiscarry outNoTimezone”:”04.37″,”title”:”UK rents soar by 8.4%”,”contributors”:[],”primaryDateLine”:”Wed 18 Sep 2024 12.00 EDT”,”secondaryDateLine”:”First published on Wed 18 Sep 2024 01.28 EDT”},{“id”:”66ea8fd48f086ad2b492a2ca”,”elements”:[{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”
Just in: UK hoparticipate price inflation has enumeratelessed.
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The unrelabelable UK hoparticipate prices incrrelieved by 2.2% to £290,000 in the 12 months to July, recent data from the Office for National Statistics shows.
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Average UK hoparticipate prices incrrelieved by 2.2%, to £290,000 in the year to July 2024, up from £288,000 in June 2024.
Read the free ➡️ https://t.co/21oFb1o4O5 pic.twitter.com/ao26eVMHi1
— Office for National Statistics (ONS) (@ONS) September 18, 2024
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That’s down from 2.7% in the 12 months to June 2024, and is the fifth monthly elevate in annual hoparticipate price inobeseion in a row.
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The ONS increates that unrelabelable hoparticipate prices incrrelieved in England to £306,000 (a elevate of 1.6%), in Wales to £218,000 (2.0%), and in Scotland to £199,000 (6.0%) in the last year.
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As summer beckoned & election results were called, hoparticipate price growth enumeratelessed. The unbravety surrounding when the next base rate cut would come, administering growth causing it to enumerateless in July 2024 to 2.2% from 2.7% in the 12 mths to June. This made the AVG home around £290,000,… pic.twitter.com/3yZfDEQcnW
— Emma Fildes (@emmafildes) September 18, 2024
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Newsflash: There’s a guideership shake-up at struggling retailer Asda.
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Asda has proclaimd that veteran retailer Sir Stuart Rose, currently its chairman, is to guide the business, taking over from co-owner Mohsin Issa, as it tries to reverse a sales deteriorate.
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Issa will now caccess on running EG Group, the petrol station and convenience store chain which he and his brother Zuber built their fortunes.
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Lord Rose, the createer CEO and chairman of Marks & Spencer, says:
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\n
We admire Mohsin’s decision to shift on from his role at Asda where his labor is end to be the sole CEO of EG Group.
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We are very appreciative to Mohsin for the role he has carry outed in administering Asda, including starting into the growth labelet of convenience stores and introducing a loyalty app now participated by more than six million customers. He has lhelp the establishations to hand over a world-class IT infrastructure, reinforceing Asda for the extfinished term. I see forward to continuing to advantage from his insight as a non-executive straightforwardor on our Board.”
\n
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The shift comes after Asda lost labelet aachievest rivals, with sales descfinishing by over 6% in the three months to mid-August.
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Rose tbetter the Telegraph last month that he was “embarrassed” by Asda’s carry outance, and that he would encourage Mohsin Issa to lastingly step back from the day-to-day running of the business. That urging seems to have come to fruition today.
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Asda says Rose will presume Mohsin Issa’s executive responsibilities aextfinishedside Rob Hattrell, a partner at TDR Capital, the personal equity firm who bought Asda aextfinishedside the Issa brothers in 2020.
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Follotriumphg increates, which have been denied, of a rift between the brothers, Zuber sbetter his Asda sconsent to TDR this summer.
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Asda grasps that it is still seeing for a CEO to guide the business “in the next phase of its strategy”.
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chart shotriumphg the postponecessitatest UK inflation rates”,”caption”:”A chart shotriumphg the postponecessitatest UK inflation rates”,”acunderstandledge”:”Pboilingograph: ONS”}}],”attributes”:{“pinned”:counterfeit,”keyEvent”:real,”summary”:counterfeit},”blockCreatedOn”:1726643955000,”blockCreatedOnDiscarry out”:”03.19 EDT”,”blockLastUpdated”:1726643977000,”blockLastUpdatedDiscarry out”:”03.19 EDT”,”blockFirstPublished”:1726643977000,”blockFirstPublishedDiscarry out”:”03.19 EDT”,”blockFirstPublishedDiscarry outNoTimezone”:”03.19″,”title”:”Chart: UK inflation”,”contributors”:[],”primaryDateLine”:”Wed 18 Sep 2024 12.00 EDT”,”secondaryDateLine”:”First published on Wed 18 Sep 2024 01.28 EDT”},{“id”:”66ea7b118f086ad2b492a23f”,”elements”:[{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”
It’s presentant to reaccumulate that although the rate of price elevates has enumeratelessed this summer, the level of prices is acutely higher than before the cost of iving crisis began.
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Darren Jones, chief secretary to the Treasury, creates this point:
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\n
“Years of sky-high inflation have consentn their toll; and prices are still much higher than four years ago.
\n
“So, while more administerable inflation is greet, we understand that millions of families apass Britain are struggling, which is why we are choosed to mend the establishations of our economy so we can recreate Britain and create every part of the country better-off.”
\n
“,”elementId”:”47300d81-f836-44ae-887d-adbd99368c79″}],”attributes”:{“pinned”:counterfeit,”keyEvent”:real,”summary”:counterfeit},”blockCreatedOn”:1726642961000,”blockCreatedOnDiscarry out”:”03.02 EDT”,”blockLastUpdated”:1726643201000,”blockLastUpdatedDiscarry out”:”03.06 EDT”,”blockFirstPublished”:1726643202000,”blockFirstPublishedDiscarry out”:”03.06 EDT”,”blockFirstPublishedDiscarry outNoTimezone”:”03.06″,”title”:”Darren Jones: millions of families are struggling”,”contributors”:[],”primaryDateLine”:”Wed 18 Sep 2024 12.00 EDT”,”secondaryDateLine”:”First published on Wed 18 Sep 2024 01.28 EDT”},{“id”:”66ea75938f08e43e1272b845″,”elements”:[{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”
The Bank of England is less probable to cut interest rates tomorrow, the City count ons, after this morning’s inflation increate showed a elevate in core inflation in August.
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The money labelets show that the odds of the BoE making no alter to borrotriumphg costs at noon on Thursday have elevaten to 73% this morning.
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That’s up from 65% before we lachieveed that headline inflation stuck above the Bank’s center in August, at 2.2%.
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Monica George Michail, associate economist at research institute NIESR, says the Bank will have noticed that underlyinng inflation “remains liftd”, even though headline CPI inflation was unalterd:
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\n
“Annual CPI inflation in August remains unalterd from July at 2.2%. Core and Services inflation rates have sairyly gone up, after an encouraging descfinish in July, write downing 3.6% and 5.6%.
\n
Given that inflation is set to gently elevate towards the end of the year, and that underlying inflation remains liftd, this shrinks chances of a rate cut tomorrow, and recent enhugements will be shutly watched by the MPC”
\n
“,”elementId”:”f5bdae68-e1b6-4b83-a1de-d68897ff934d”},{“_type”:”model.dotcomrendering.pageElements.TweetBlockElement”,”source”:”Twitter”,”id”:”1836292656239968405″,”elementId”:”1636eef5-8348-4639-bd0b-0fd4c7c59366″,”hasMedia”:counterfeit,”role”:”inline”,”url”:”https://x.com/NIESRorg/status/1836292656239968405″,”isThirdPartyTracking”:counterfeit,”html”:”
⚡️Our reaction to today's #inflation figures is out now ⚡️@MichailMonica @_maxmosley @RoyalEconSoc pic.twitter.com/VXFHFsYoJp
— National Institute of Economic and Social Research (@NIESRorg) September 18, 2024
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Inflation at the UK factory gate enumeratelessed last month, which may feed thcdisorrowfulmireful to devourrs in coming months.
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The output prices indictd by UK creaters rose by 0.2% in the year to August, the Office for National Statistics increates, down from 0.8% in July.
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Producers saw their own input prices descfinish, by 1.1% year-on-year, thanks to a drop in the oil price.
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Factory gate prices rose by 0.2% in the year to August, down from an incrrelieve of 0.8% in the year to July.
Meanwhile, the cost of raw materials fell 1.2% in the year to August, down from a editd incrrelieve of 0.2% in the year to July.
Read the free ➡️ https://t.co/RVyWiQG2T9 pic.twitter.com/wjC7d5c8PL
— Office for National Statistics (ONS) (@ONS) September 18, 2024
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Services inflation quickend to 5.6% in August, from 5.2% in July, the inflation increate shows.
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Conversely, excellents prices progressd to descfinish, and at a speedyer rate. The CPI excellents annual rate fell from -0.6% to -0.9%.
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Worryingly, underlying inflation apass the UK has elevaten.
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The Core CPI, which leave outs energy, food, spirits and tobacco, rose by 3.6% in the 12 months to August 2024, up from 3.3% in July.
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Economists had anticipateed a petiteer elevate in core inflation, to 3.5%.
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Despite stresss of a Taylor Swift effect, boilingel and restaurant prices actuassociate fell last month.
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Today’s inflation increate shows that prices at restaurants and boilingels fell by 0.7% in August, contrastd with July.
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This pulled the annual inflation rate for restaurants and boilingels down to 4.4% in August 2024, down from 4.9% in the year to July, and the lowest rate since July 2021.
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The ONS increates that the prices of various spirits products at pub and restaurants rose by less than a year ago.
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annual inflation rate for restaurants and boilingels in August was the lowest since July 2021″,”acunderstandledge”:”Pboilingograph: ONS”}},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”
Some economists have presented that sturdy insist from Swifties joining concerts this summer could have had an upward affect on inflation, as boilingel owners reacted to higher insist by wunapcheckd access up prices.
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In August, Taylor Swift carry outed five dates at Wembley Stadium.
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The cost of petrol and diesel fell last month, countering the impact of higher air fares and holding inflation at 2.2%.
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Today’s UK inflation increate shows that motor fuel prices fell by 3.4% in the year to August, contrastd with a elevate of 1.8% in the year to July.
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According to the ONS, the unrelabelable price of petrol fell by 2.1p per litre between July and August to 142.3p per litre. That’s down from 148.5p per litre in August 2023.
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Diesel prices fell by 2.6p per litre in August to 147.8p per litre, down from 151.1p per litre in August 2023.
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ONS chief economist Grant Fitzner says:
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\n
“Inflation held stable in August as various price fluctuations offset each other.
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“The main shiftments came from air fares, in particular to European destinations, which showed a huge monthly elevate, follotriumphg a descfinish this time last year.
\n
“This was offset by drop prices at the pump as well as descfinishing costs at restaurants and boilingels. Also, the prices of shop bought spirits fell sairyly this month, but rose at the same time last year.
\n
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Newsflash: UK inflation remained unalterd last month, above the UK’s official center.
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The Consumer Prices Index, which tracks cost alters apass the economy, rose by 2.2% in the year to August, data equitable freed by the Office for National Statistics shows.
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That unbenevolents prices are rising a little speedyer than the Bank of England’s center of 2%.
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CPI rose by 2.2% in the 12 months to August 2024, unalterd from July 2024.
Read the free ➡️ https://t.co/3rW4NgMQNJ pic.twitter.com/AvTfVmsj53
— Office for National Statistics (ONS) (@ONS) September 18, 2024
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Shoppers may face a choccy horror show this Hapcheckeen after the price of chocopostponecessitate sboiling up 11% in the past year – far outclear upping incrrelieves for other foods apass UK superlabelets.
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Britons uncovering their doors to trick-or-treaters could choose to cut back on spending for 31 October, as the cost of chocopostponecessitate rose acutely in the year to the end of August, way above wider grocery inflation of 2.7% over the same period, according to research by the devourr group Which?
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The price has elevaten after cocoa prices more than doubled on world labelets in the face of tree disrelieve and adverse weather in growing countries deteriorated by the climate crisis.
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Butler”,”imageUrl”:”https://i.guim.co.uk/img/uploads/2022/11/09/Sarah_Butler.jpg?width=300&quality=85&auto=format&fit=max&s=71c588f8abb3327a593d04d22e7f2b53″,”largeImageUrl”:”https://i.guim.co.uk/img/uploads/2022/11/09/Sarah_Butler_Next_Gen.png?width=300&quality=85&auto=format&fit=max&s=fe4fee7a16856b50bcffd22cadef6501″}],”primaryDateLine”:”Wed 18 Sep 2024 12.00 EDT”,”secondaryDateLine”:”First published on Wed 18 Sep 2024 01.28 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stack of Tupperware graspers.”,”acunderstandledge”:”Pboilingograph: Anton Starikov/Alamy”}},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”
While we postpone for the UK inflation increate… Tupperware, the manufacturer of food storage graspers, has filed for prohibitkruptcy protection.
“,”elementId”:”68808d95-ece6-4193-98e6-5813c0e22acd”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”
Tupperware proclaimd this morning it has voluntarily befirearm Chapter 11 progressings in the United States Bankruptcy Court for the Didisjoine of Delconscious.
“,”elementId”:”4a23f8fc-2c10-44af-8c64-ff1e96dfe115″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”
Laurie Ann Gbetterman, plivent and chief executive officer of Tupperware, accparticipated a “challenging macroeconomic environment” (costs of raw materials have jumped, and the pandemic boom in home cooking has faded, hurting sales).
“,”elementId”:”d5fc7277-fd2f-47a6-a6bd-dfebca2a42f6″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”
Gbetterman grasped:
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“Whether you are a pledgeted member of our Tupperware team, sell, cook with, or srecommend adore our Tupperware products, you are a part of our Tupperware family. We structure to progress serving our cherishd customers with the high-quality products they adore and count on thcdisorrowfulmirefulout this process.”
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“,”elementId”:”d442f0cc-4c76-4f00-bc13-6c9b9b876135″}],”attributes”:{“pinned”:counterfeit,”keyEvent”:real,”summary”:counterfeit},”blockCreatedOn”:1726638554000,”blockCreatedOnDiscarry out”:”01.49 EDT”,”blockLastUpdated”:1726640990000,”blockLastUpdatedDiscarry out”:”02.29 EDT”,”blockFirstPublished”:1726638793000,”blockFirstPublishedDiscarry out”:”01.53 EDT”,”blockFirstPublishedDiscarry outNoTimezone”:”01.53″,”title”:”Tupperware Brands files for prohibitkruptcy protection”,”contributors”:[],”primaryDateLine”:”Wed 18 Sep 2024 12.00 EDT”,”secondaryDateLine”:”First published on Wed 18 Sep 2024 01.28 EDT”},{“id”:”66e9948b8f086ad2b4929a2d”,”elements”:[{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”
Good morning, and greet to our rolling coverage of business, the financial labelets and the world economy.
“,”elementId”:”a2d63172-fbdf-4019-9430-aa0c8711d623″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”
Inflation and interest rates are top of the agenda today.
“,”elementId”:”3376c8da-41a8-4696-850c-b0c8345a35d2″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”
Firstly, we’re about to lachieve how speedy prices rose apass the UK last month, when the postponecessitatest official inflation increate is freed at 7am.
“,”elementId”:”93c2b90d-bd77-49e9-a8d7-93630b96cccf”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”
Economists foresee the devourr prices index rose by 2.2% in the year to August, suiting July’s figure.
“,”elementId”:”6feb494a-7543-425f-a4ae-a014891e3889″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”
That would unbenevolent prices were rising sairyly speedyer than the Bank of England’s 2% center, but at a much enumeratelesser pace than during the height of the cost of living crisis in autumn 2022, when inflation hit 11.1%.
“,”elementId”:”d8bd380e-e2d0-4eb6-8ed1-e70389d8d380″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”
A feeble inflation reading might give the Bank of England confidence to cut interest rates on Thursday, while a higher rate would create policycreaters lean towards holding borrotriumphg costs.
“,”elementId”:”70a54bc3-77be-4f8b-bf68-807047dcc057″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”
As leangs stand, the money labelets recommend there’s a 65% chance that the BoE departs rates on hbetter tomorrow, and equitable a 35% chance of a cut.
“,”elementId”:”9886020c-6a30-4d61-8bea-9c55679ab014″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”
Interest rates apass the Atlantic will probably be cut postponecessitater today – the ask is by how much. Investors are split over whether the US Federal Reserve will begin its easing programme unassumingly, with a cut of a quarter of one percent (25 basis points), or go huge with a half-point reduction.
“,”elementId”:”56ba14ff-7d58-4f8a-a93d-77a1aa3b9cc9″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”
Currently, the labelets leank a bumper 50 basis-point cut is more probable. But we’ll see at at 7pm.
“,”elementId”:”12522cc7-4e92-49b5-a5d7-5a054bc6e02e”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”
Kit Juckes, currency expert at French prohibitk Société Générale, says:
“,”elementId”:”bfabc84a-3875-4572-a207-a09858e4443d”},{“_type”:”model.dotcomrendering.pageElements.BlockquoteBlockElement”,”html”:”
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Is the Fed a hare or a tortoise? Whether we get a 25bp or a 50bp cut from the Fed tomorrow matters less than the destination of rates. Reaching the right destination is more presentant than how speedy you begin. Just ask the hare!
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“,”elementId”:”e220cc3c-553c-4c9e-bf8e-49f1729fe260″},{“_type”:”model.dotcomrendering.pageElements.SubheadingBlockElement”,”html”:”
The agenda
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7am BST: UK inflation increate for August
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9.30am BST: UK hoparticipate prices and rental costs data
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10am BST: Eurozone inflation increate for August (final reading)
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7pm BST: Federal Reserve sets US interest rates
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7.30pm BST: Federal Reserve press conference
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“,”elementId”:”35af18c9-db3a-4d0c-9c43-e631d28485f9″}],”attributes”:{“pinned”:counterfeit,”keyEvent”:real,”summary”:counterfeit},”blockCreatedOn”:1726637307000,”blockCreatedOnDiscarry out”:”01.28 EDT”,”blockLastUpdated”:1726637659000,”blockLastUpdatedDiscarry out”:”01.34 EDT”,”blockFirstPublished”:1726637307000,”blockFirstPublishedDiscarry out”:”01.28 EDT”,”blockFirstPublishedDiscarry outNoTimezone”:”01.28″,”title”:”Introduction: UK inflation and US interest rate decision today”,”contributors”:[],”primaryDateLine”:”Wed 18 Sep 2024 12.00 EDT”,”secondaryDateLine”:”First published on Wed 18 Sep 2024 01.28 EDT”}],”filterKeyEvents”:counterfeit,”id”:”key-events-caroparticipatel-mobile”,”absoluteServerTimes”:counterfeit}”>
Key events
Why is the Fed cutting rates?
The Federal Reserve is anticipateed to proclaim an interest rate cut for the first time in four years at 2pm. Many economists see this moment as the end of an era, and the beginning of the end of the central prohibitk’s fight aachievest inflation.
It primarily sees at two leangs when pondering the interest rate: price growth and the labor labelets.
Follotriumphg years of pandemic-roverhappinessed turmoil in the economy, inflation began to rapidly incrrelieve. The Fed hiked rates 11 times over a period of about a year and a half, from March 2022 until July 2023, the last time it incrrelieved rates.
Since then, inflation has enumeratelessed presentantly. The labor labelet has remained sturdy, but has begined to chilly.
As the most recent inflation and jobs data seemed to both show chillying, Fed officials begined signaling postponecessitate in the summer that it was time to cut rates.
Wall Street is still tranquil, with under two and a half hours until the Fed’s decision hits the wires.
The Dow Jones industrial unrelabelable is currently down 0.08%, or 34 points, at 41,571 points.
The wideer S&P 500 index is down 6 points or 0.11%. at 5,628 points, and the Nasdaq Composite is also very sairyly drop.
And with that, I’m handing over to my colleague Lauren Aratani…. GW
A survey published yesterday by CNBC establish that 84% of the 27 replyents, including economists, fund administerrs and strategists, thought the Fed would cut by a quarter percentage point.
That left 16% foreseeing a half-point decrrelieve.
So aachieve, that clashes with the pricing in the futures labelet, where a half-point cut is more probable.
CNBC says:
The presentant separateence could be that survey replyents ecombine less worried about the economy overall than futures labelets, and more guaranteed the Fed has time to enact gradual rate cuts.
Seventy-four percent shelp the September rate cut comes in time to protect a gentle landing, with equitable 15% saying it’s too postponecessitate.
Analysts at Oxford Economics reckon stresss of a US economic downturn have been overcooked.
They tbetter clients today:
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The Fed will begin its extfinished-telegraphed pivot today, but we leank one-year ahead rates pricing by labelets is too dovish and inreliable with our gentle-landing see.
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Grotriumphg worrys that the US might be slipping towards a economic downturn are unestablished and we leank recent data remain reliable with a more orderly and benign growth enumeratelessdown.
A dovish carry outance from the Federal Reserve today could drive the gbetter price to recent highs, analysts say.
Gbetter has already hit a series of write down highs this year, as it climbed by 25% since the begin of January to almost $2,600/ounce this week.
Ricardo Evangeenumeratea, better analyst at ActivTrades, presents a steep cut to US interest rates could drive gbetter higher, as it would feebleen the dollar (in which gbetter is priced).
Attention is now firmly on today’s Fed rate decision, with a growing number of traders anticipating a 50-basis-point cut. If this scenario materializes, it would probable feebleen the dollar, raiseing gbetter prices.
The extent of the upside for precious metals will depend on how dovish Jerome Powell’s tone is during his post-proclaimment graspress. Should the Fed Chair signal the possibility of further rate cuts postponecessitater in the year, gbetter could be poised to achieve recent write down highs.
US housing begins rebound
Construction of one-family US homes rebounded acutely in August, recent data shows.
Housing begins – a meabrave of how many createion projects got underway – jumped by 9.6% in August to an annual rate of 1.356 million units, the Commerce Department’s Census Bureau increateed.
The incrrelieve was driven by a csurrfinisher-16% jump in one-family housing begins.
The incrrelieve presents createing labor got underway aachieve last month after Hurricane Beryl disturbed the sector in July.
Bloomberg increate that futures traders have made a write down number of wagers that the Federal Reserve will create an “outsized cut” to rates today.
That unbenevolents there could be acute losses if the Fed only drops borrotriumphg costs by a quarter of one percentage point (25 basis points) today.
Bloomberg elucidate:
Bond spendors that have been franticassociate wagering on the size of the Federal Reserve’s first interest-rate cut in four years are about to discover out whether they made the right trade.
The labelet is filledy pricing in a quarter-point rate reduction on Wednesday, when the US central prohibitk is anticipateed to start off its rate-cutting cycle, with the chance of a hugeger shift seeed as a coin-flip. Treasuries have rallied into the decision, climbing for a fifth-straight month and driving low-dated creates — those most caring to Fed policy — to their lowest in two years.
Deutsche Bank poll: 50bp cut would be a shock
Just in: A presentantity of financial experts polled by Deutsche Bank today anticipate the Fed will only cut US interest rates by a quarter of one-percent.
Ir’s a slighly imprompu poll, guideed by Deutsche’s labelet strategist Jim Reid since 7am UK time among readers of his morning research notice (highly recommended, by the way).
1,400 people took part – and the poll showed that they are anticipateing an unrelabelable of 34.4 basis points of cuts today. That’s less than the futures labelet is foreseeing [it’s also not going to happen; the Fed will either do 25bo or 50bp].
Reid says:
62% [of respondents] anticipate 25bps and 38% anticipate 50bps. This presents 50bps would be a hugeger shock than 25bps to a wideer global financial labelet audience, the opposite way round in terms of biases to what Fed fund futures tights are telling us.
As flagged earlier, the futures labelet reckons a 50bp cut is more probable than a 25bp one – so there’s a disjoin between that and the Deutsche survey…
The US dollar could rassociate if the Federal Reserve only cuts interest rates by a quarter of one percent, or sink if the Fed plumps for a half-point cut.
And that shiftment will have implications for other assets, including splits, oil and gbetter.
Rania Gule, better labelet analyst at XS.com, elucidates how it could pan out:
If the dollar drops presentantly due to a huge rate cut, it could guide to higher prices for dollar-denominated commodities such as gbetter and oil. A feebleer dollar creates these assets affordableer for foreign spendors, raiseing insist for them. This scenario could guide to a elevate in gbetter prices, as gbetter is pondered a haven during times of economic unbravety. Similarly, a feebleer dollar could help oil prices, especiassociate with progressd sturdy insist from emerging labelets and shrinkd provide from OPEC.
Regarding equities, the impact of a rate cut on the dollar could be twofbetter. On one hand, droping interest rates shrinks borrotriumphg costs, enhancing companies’ ability to spend and enhuge, which helps stock labelets. On the other hand, if commodity prices appreciate oil elevate due to a feebleer dollar, companies that heavily count on on presenting raw materials may face presbrave on their profit margins.