FirstFT: BoE raises rates by 0.75 percentage points

The Bank of England has signalled that borrowing costs will not rise as much as markets expect in the future, even as it imposed the biggest rate increase in three decades to combat soaring inflation.

The BoE’s 0.75 percentage point bump to 3 per cent took interest rates to their highest point since 2008. But the central bank issued unusually strong guidance that rates would not need to rise much further to bring inflation back to its 2 per cent target, partly because it forecast a prolonged recession ahead.

The move followed identical increases by the US Federal Reserve on Wednesday and the European Central Bank last week as monetary authorities worldwide sought to contend with rising inflation, which has reached a 40-year high of 10.1 per cent in the UK.

Guidance and economic forecasts published by the BoE suggested it was taking a more dovish stance on interest rates than the Fed, whose chair Jay Powell this week labelled talk of pausing interest rate rises as “very premature”.

Thanks for reading. FirstFT Europe/Africa will be back in your inbox on Monday — Gary

Five more stories in the news

1. Ping An calls for ‘aggressive’ cost-cutting at HSBC The bank’s largest shareholder has called for “much more aggressive” cost reduction and job cuts, while warning that its board lacks experience in Asia. Chinese insurer Ping An has been privately urging HSBC to hive off its Asian operations to boost returns.

2. Sunak expected to shelve plans to privatise Channel 4 Prime Minister Rishi Sunak is expected to scrap the proposed privatisation of publicly owned UK broadcaster Channel 4 as he reassesses policy pledges by his predecessors to streamline a packed legislative programme. Channel 4 has faced half a dozen privatisation proposals since it was launched in 1982.

3. LNG tankers idle off Europe’s coast as traders wait for gas price rise More than 30 tankers holding $2bn worth of liquefied natural gas are floating just off Europe’s shoreline, as energy traders bet an autumn price reprieve will prove to be fleeting and the glut of natural gas in Europe’s storage draws down.

4. UK to ban ship insurance cover for Russian oil ahead of G7 price cap The ban will cut off access to the vital Lloyd’s of London market for seaborne Russian cargoes, the Treasury said, and is a key step in the G7’s attempts to impose a price cap on Russian oil exports as the insurance ban would be waived for countries that sign up to the scheme.

5. China’s central bank struggles to force tech groups to share user data with state The People’s Bank of China is struggling to get tech giants to share users’ personal information with state-backed credit-scoring companies as part of efforts to assess potential borrowers’ creditworthiness. The stand-off comes as Beijing works to tighten its grip on the country’s tech sector.

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The days ahead

Economic data S&P releases its Eurozone Composite PMI report today, while the US and Canada have October employment figures.

Earnings Duke Energy, Itochu and Telefónica release quarterly earnings today. Warren Buffett’s Berkshire Hathaway reports third-quarter earnings tomorrow.

Bahrain Pope Francis continues his first trip to the the predominantly Muslim country to address the Bahrain Forum for Dialogue, a conference with the theme “East and West for Human Coexistence”.

What else we’re reading

Starbucks’ Schultz: ‘The soul of the company was being compromised’ Four years after retiring and three since his abortive presidential campaign, Howard Schultz is back for a third shift as Starbucks’ chief executive. In an interview with the Financial Times, he discusses succession, a barista revolt, the impact of the pandemic and the challenges ahead for the global coffee chain.

‘Britons now have the worst access to healthcare in Europe’ The UK is now roughly three years into a steady march of chronic illness that is scything through the most vulnerable and marginalised, writes John Burn-Murdoch, and lengthy waiting lists are preventing millions from accessing the services they need.

Kherson residents describe reign of terror under Russian rule As Ukraine pursues its counteroffensive in Kherson, those living in the southern region have said the occupying authorities are terrorising anyone who defies them, with an alleged public hanging of a defiant woman just one example of Moscow’s brutality in occupied territory.

‘They used me and threw me out’: The woes of Qatar’s World Cup workers Preparations for the World Cup have been dogged by long-running accusations that the imported workers who have built the stadiums and related infrastructure have endured miserable conditions, including low wages, non-payment of salaries and unsafe workplaces.

“They forcefully sent workers away, including me. It was not my choice to return to Nepal.” —Jeevan, a Nepalese migrant worker who took out a high-interest loan worth $1,400 to secure a job in Qatar

Executives wake up to their collective blind spots We learnt from the financial crisis that when networks lack diversity, they are vulnerable to a single shock, writes Gillian Tett. But what is striking, in retrospect, is that the non-financial world seems to have learnt so little from it.

Travel

FT Globetrotter editors weigh in on how to make the most of your next trip on this episode of the FT Weekend podcast. Check out Globetrotter for more on doing karaoke in Tokyo with your boss, New York’s high-end Korean food scene and more.