Aurelia Butler

Standard DigitalWeekend Print + Standard Digitalwasnow $85 per monthBilled Quarterly at $199. Complete digital access plus the FT newspaper delivered Monday-Saturday.What’s included Global news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print editionWeekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisGlobal news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts10 monthly gift articles to shareGlobal news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print editionEverything in PrintWeekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisPlusEverything in Premium DigitalEverything in Standard DigitalGlobal news & analysisExpert opinionSpecial featuresFirstFT newsletterVideos & PodcastsFT App on Android & iOSFT Edit app10 gift articles per monthExclusive FT analysisPremium newslettersFT Digital Edition10 additional gift articles per monthMake and share highlightsFT WorkspaceMarkets data widgetSubscription ManagerWorkflow integrationsOccasional readers go freeVolume discountFT Weekend Print deliveryPlusEverything in Standard DigitalFT Weekend Print deliveryPlusEverything in Premium Digital More

The firm indicated that the UK’s headline inflation has reached its lowest point since July 2021, while core inflation has finally dropped to the 3% range. Despite these dovish indicators, April’s inflation figure, which is critical for the BoE’s short-term policy decisions, was higher than anticipated.The analysis highlighted that the increase in core goods inflation aligned with Morgan Stanley’s projections, suggesting a softer detail behind the numbers.However, service inflation presented a different scenario, with broad-based increases, especially in sectors sensitive to the National Living Wage (NLW), such as recreational and cultural services, catering, and hotels.Morgan Stanley’s report also revisited the disinflationary process as envisioned by the majority of the Monetary Policy Committee (MPC) earlier in the year. It questioned whether the elevated pay growth, which surveys suggest will stabilize at around 4% next year, still remains a secondary concern given the unexpected rise in NLW-sensitive sectors.The firm pointed out that while this inflation data is important, it is also typical for UK businesses to adjust prices in April. If this marks the end of significant price level adjustments, then the recent market repricing of UK interest rates may have been excessive.Morgan Stanley anticipates that services inflation will adjust to approximately 5.4% year-on-year in May, with a potential for further increases due to NLW effects.As a result of the latest data, Morgan Stanley has withdrawn its expectation for a rate cut by the BoE in June. The firm now views August as the earliest feasible date for a rate reduction, although it admits its conviction is not strong.This stance is influenced by the upcoming change in the MPC’s composition and the need for more evidence on the services inflation trend.Looking beyond the immediate term, Morgan Stanley has made no significant changes to its structural outlook based on just one inflation report.The firm maintains its forecast of a total 75 basis points cut in interest rates by the BoE this year, with reductions likely occurring in September and November.The medium-term inflation outlook has been slightly adjusted, with headline inflation forecasts for 2024 and 2025 increased by 10 basis points to 2.5% and 1.9%, respectively.This article was generated with the support of AI and reviewed by an editor. For more information see our T&C. More

Standard DigitalWeekend Print + Standard Digitalwasnow $85 per monthBilled Quarterly at $199. Complete digital access plus the FT newspaper delivered Monday-Saturday.What’s included Global news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print editionWeekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisGlobal news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts10 monthly gift articles to shareGlobal news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print editionEverything in PrintWeekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisPlusEverything in Premium DigitalEverything in Standard DigitalGlobal news & analysisExpert opinionSpecial featuresFirstFT newsletterVideos & PodcastsFT App on Android & iOSFT Edit app10 gift articles per monthExclusive FT analysisPremium newslettersFT Digital Edition10 additional gift articles per monthMake and share highlightsFT WorkspaceMarkets data widgetSubscription ManagerWorkflow integrationsOccasional readers go freeVolume discountFT Weekend Print deliveryPlusEverything in Standard DigitalFT Weekend Print deliveryPlusEverything in Premium Digital More

In an interview with business news channel CNBC, Dimon argued that “anyone who reads history” cannot discard the possibility of this scenario, which would see the U.S. dip into an economic downturn following a period of recent growth.Dimon told CNBC that the worst outcome for the world’s biggest economy would be “stagflation,” in which inflation remains sticky while growth slows and unemployment is high.However, he said that currently the U.S. consumer is still in “good shape” to weather the impact of a possible slowdown.The comments come after Dimon warned at an event in New York earlier this week that he was “cautiously pessimistic” about the broader economic outlook due to stubborn price pressures and geopolitical tensions.Minutes from the Federal Reserve’s latest meeting released on Wednesday showed policymakers at the central bank believe elevated inflation will only ease slowly back down to their 2% target.Although recent figures have hinted at a cooldown in inflation, several Fed officials have said they would still like to see more evidence that the decline is sustainable before rolling out any potential upcoming interest rate cuts. More

The BoE uses the weekly repo to help keep money market rates close to its official Bank Rate while it takes reserves out of the financial system with its quantitative tightening (QT) programme.Under QT, the BoE is selling a large chunk of the government bonds that it bought over the past 15 years via its quantitative easing programme, and allowing others to mature. BoE Governor Andrew Bailey said on Tuesday the recent increase in the use of the short-term repo facility was encouraging and showed the benefits of having “tried and tested” liquidity facilities as the central bank ran down its balance sheet. More

Standard DigitalWeekend Print + Standard Digitalwasnow $75 per monthComplete digital access to quality FT journalism with expert analysis from industry leaders. Pay a year upfront and save 20%.What’s included Global news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print editionWeekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisGlobal news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts10 monthly gift articles to shareGlobal news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print editionEverything in PrintWeekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisPlusEverything in Premium DigitalEverything in Standard DigitalGlobal news & analysisExpert opinionSpecial featuresFirstFT newsletterVideos & PodcastsFT App on Android & iOSFT Edit app10 gift articles per monthExclusive FT analysisPremium newslettersFT Digital Edition10 additional gift articles per monthMake and share highlightsFT WorkspaceMarkets data widgetSubscription ManagerWorkflow integrationsOccasional readers go freeVolume discountFT Weekend Print deliveryPlusEverything in Standard DigitalFT Weekend Print deliveryPlusEverything in Premium Digital More

Around 294,400 apartments were built last year, 0.3% fewer than in 2022 and far below the government’s target of building 400,000 apartments annually, Federal Statistics Office data showed on Thursday. The authorities approved only 260,000 constructions during the year – the lowest level since 2012, and the number of permits continued to fall in the first quarter of 2024, data last week had shown. Construction Minister Klara Geywitz described the numbers as stable, adding that more private companies were participating in affordable housing projects which she called an “anchor of stability” for the housing sector. Berlin earmarked 18 billion euros ($19.51 billion) for affordable housing amid a cost of living crisis, in order to provide homes for recently arrived immigrants to Europe’s biggest economy. A sudden jump in interest rates and building costs, coupled with an abrupt end to cheap energy from Russia and red tape have hit German property demand, with investors choosing other destinations such as Britain or France. Commercial property prices in Germany tumbled by 9.6% in the first three months of 2024 compared with a year earlier after a 10.2% drop for 2023 – according to the VDP banking association.The housing construction backlog – apartments that have been approved but not yet built – has fallen for the first time since the 2008 financial crisis, according to the statistics office data. ($1 = 0.9225 euros) More

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