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    UK inflation falls sharply to 1.7%, below Bank of England’s target for first time in over three years

    Inflation in the U.K. dropped sharply to 1.7% in September, the Office for National Statistics said Wednesday, beating expectations for a fall to 1.9% from 2.2% in August.
    Core inflation, excluding the volatile impact of energy, food, alcohol and tobacco, came in at 3.2% for the month, down from 3.6% in August and below the 3.4% forecast of a Reuters poll.
    The British pound fell against the U.S. dollar and euro following the cooler-than-forecast print as economists said a November rate cut from the Bank of England looked more likely.

    A wet Piccadilly Circus during a rainy morning in the West End, on 26th September 2024, in London, England. 
    Richard Baker | In Pictures | Getty Images

    LONDON — Inflation in the U.K. dropped sharply to 1.7% in September, the Office for National Statistics said Wednesday, ramping up market expectations for a Bank of England rate cut in November.
    Economists polled by Reuters had expected the headline rate to come in at a higher 1.9% for the month, in the first dip below the BOE’s 2% target since April 2021.

    Inflation has been hovering around that level for the last four months, and came in at 2.2% in August.

    Core inflation, which excludes energy, food, alcohol and tobacco, came in at 3.2% for the month, down from 3.6% in August and below the 3.4% forecast of a Reuters poll.
    Price rises in the services sector, the dominant portion of the U.K. economy, eased significantly to 4.9% last month from 5.6% in August, now hitting its lowest rate since May 2022.
    Core and services inflation are key watch points for Bank of England policymakers as they mull whether to cut interest rates again at their November meeting.

    Cuts ahead?

    Money market pricing for a 25-basis-point November rate cut jumped from 80% to 92% following the latest inflation print, with a follow-up trim in December nearly fully priced in. Analysts had on Tuesday said lower wage growth reported by the ONS this week supported the case for a rate cut.

    Two more quarter-percentage-point reductions this year would take the BOE’s key rate to 4.5%, after the central bank kicked off rate cuts in August, then held in September.
    A fall in the British pound following the publication on Wednesday reflected more dovish expectations for the BOE, with sterling down 0.6% against the U.S. dollar at $1.299, falling below the $1.3 level for the first time since Sept. 11. The British currency moved 0.5% lower against the euro.
    The yields on British government bonds, known as gilts, meanwhile dropped across the board. Two-year gilt yields fell 9 basis points as the 10-year gilt yield fell 7 basis points.

    Stock chart icon

    British pound versus U.S. dollar.

    Headline U.K. inflation has eased from a peak of 11.1% in October 2022 to September’s 1.7%.
    “These figures provide reassurance that the U.K. has moved into a more moderate inflation environment, aided by lower fuel prices,” Suren Thiru, economics director at the Institute of Chartered Accountants in England and Wales, said in a note, with the “notable drop” in services inflation indicating “underlying price pressures are becoming less sticky.”
    Thiru nevertheless added that British inflation could reverse its decline in October because of an increase in the regulator-set energy price cap, while the BOE will wait to assess the U.K. Labour government’s keenly-awaited debut budget at the end of the month for any potential inflationary impact before locking in a course.

    Capital Economics’ Chief U.K. Economist Paul Dales was similarly cautious, pointing out that a large part of the unexpected weakness in core and services inflation was due to a big fall in airfares price rises. The BOE is slightly more likely to stick to 25-basis-point cuts at every other meeting as a result, Dales said, even if the chance of two more reductions this year has now gone up.
    “We still think rates will eventually fall to 3.00%, which is lower than the 3.50-3.75% priced into the market,” he said.
    However, Deutsche Bank’s Chief U.K. Economist Sanjay Raja said the inflation figures would be “music to the [Monetary Policy Committee’s] ears” and could lead them to consider a faster unwinding of restrictive policy, including sequential rate cuts.
    Raja also noted the risk presented by the budget, which he said was “likely to be expansionary despite the scale of fiscal consolidation coming on 30 October.” More

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    With $32 Billion in Aid, Native Americans Push Against History of Neglect

    Cortez, a Colorado town of about 9,000 people tucked near the San Juan Mountains, has the trappings of a humble but healthy small-town economy: bustling businesses, congenial single-family homes, a park with grassy fields, a public pool, playgrounds, a pond and skate ramps.A couple of hours southwest is Tuba City, Ariz., the largest community on Navajo Nation tribal lands. It has roughly the same population as Cortez, and it is surrounded by the same sandstone and mesa-filled terrain. But despite the area’s rich history of trade, and its proximity to thriving cities like Flagstaff and tourist sites like the Grand Canyon, widespread poverty and a lack of public services are notably entrenched — the stark reality across many reservations throughout the country.Gas stations, dollar stores and fast-food chains fill most of the skinny commercial strips. R.V. trailers and other mobile homes make up much of the housing stock. One in three Navajo households has income below the federal poverty line. Red dust whiffling in from desert winds tends to be more common than the dust stirred up by builders.Gas stations, dollar stores and fast-food chains fill most of Tuba City’s skinny commercial strips. Sharon Chischilly for The New York TimesAt the town’s center, though, is a recent exception: the construction of a 5,500-square-foot senior center, whose $5 million cost is partly financed with about $1 million from the American Rescue Plan Act, passed in 2021.That package, primarily meant to address the economic and public health crises caused by Covid-19, included $32 billion in short- and longer-term assistance for tribes and reservations: aid for households and tribal government coffers, community development grants, health services and infrastructure; as well as access to the $10 billion State Small Business Credit Initiative program, which previously excluded tribal nations.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Trump Brags About His Math Skills and Economic Plans. Experts Say Both Are Shaky.

    In a combative interview, the former president hinted at even higher tariffs as an economic magic bullet.Former President Donald J. Trump has been offering up new tax cuts to nearly every group of voters that he meets in recent weeks, shaking the nerves of budget watchers and fiscal hawks who fear his expensive economic promises will explode the nation’s already bulging national debt.But on Tuesday, Mr. Trump made clear that he was unfazed by such concerns and offered a one-word solution: growth. Despite the doubts of economists from across the political spectrum, Mr. Trump said that he would just juice the economy by the force of his will and scoffed at suggestions that his pledges to abolish taxes on overtime, tips and Social Security benefits could cost as much as $15 trillion.“I was always very good at mathematics,” Mr. Trump told John Micklethwait, the editor in chief of Bloomberg News, in an interview at the Economic Club of Chicago.Faced with repeated questioning about how he could possibly grow the economy enough to pay for those tax cuts, Mr. Trump dismissed criticism of his ideas as misguided. He professed his love of tariffs and insisted that surging output would cover the cost of his plans.“We’re all about growth,” Mr. Trump said, adding that his mix of tax cuts and tariffs would force companies to invest in manufacturing in the United States.The national debt is approaching $36 trillion. The Committee for a Responsible Federal Budget projected last week that Mr. Trump’s economic agenda could cost as much as $15 trillion over a decade. Economists from the Peterson Institute for International Economics, a nonpartisan think tank, estimated last month that if Mr. Trump’s plans were enacted, the gross domestic product could be 9.7 percent lower than current forecasts, shrinking output and dampening consumer demand.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Meet Michelle Bowman, the Fed Official Cited by JD Vance

    Michelle Bowman, a Trump-appointed Fed official recently cited by JD Vance, has been gaining prominence.When Senator JD Vance wanted to back up the assertion he made during the vice-presidential debate that new immigrants are exacerbating America’s housing affordability crisis, he cited a Federal Reserve study. Except it wasn’t a study. It was a speech by Michelle Bowman, a Fed governor appointed by former President Donald J. Trump.Ms. Bowman’s name is likely little known outside Washington. But that may be about to change, as Ms. Bowman positions herself as a prominent conservative voice at the central bank ahead of a possible Trump presidency.Ms. Bowman, 53, was first nominated to the Fed’s seven-person Board of Governors by Mr. Trump in 2018. A former state bank commissioner of Kansas, she had previously worked in community banking and as an adviser in the Department of Homeland Security during the George W. Bush administration. She filled the governor spot on the Fed Board that is earmarked for community bankers.Unlike many Fed officials, she is not a doctoral economist with a string of coastal schools behind her name. Ms. Bowman holds a degree in advertising and journalism from the University of Kansas and a law degree from Washburn University. Given her limited macroeconomic experience, she has never been a closely watched player when it comes to the Fed’s interest rate decisions. Her speeches have long focused on nitty-gritty banking issues.But Ms. Bowman’s criticism of the Fed’s approach to bank rules over the last two years — as well as her recent and rare move to push back on the central bank’s half-point interest rate cut — has raised her public profile.In September, Ms. Bowman voted against the central bank’s decision to lower interest rates sharply. That stood out, because Fed governors hardly ever dissent on economic policy: Hers was the first “no” vote by a governor since 2005.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Would a Strong Job Market Stop Fed Rate Cuts? This Official Says No.

    Mary C. Daly, the president of the Federal Reserve Bank of San Francisco, said that the central bank shouldn’t act “out of fear.”Federal Reserve officials predicted at their last meeting that they would make two more quarter-point rate cuts before the end of 2024 as inflation continued to slow and the job market cooled further.But in the weeks since, labor data have come in stronger, opening a big question: What does it mean for the interest rate outlook if the job market does not slow from here?One Fed official suggested on Tuesday that the central bank should keep lowering interest rates as expected even if the economy is chugging along, so long as inflation continues to cool. Policymakers, she suggested, should not try to slow the economy down if evidence suggests that price increases are coming under control.“I’m very opposed to cutting off expansion out of fear,” Mary C. Daly, the president of the Federal Reserve Bank of San Francisco, said during an interview on Tuesday morning, ahead of a speech she delivered at New York University.She pointed out that back in 2019, in the year leading up to the pandemic, the job market was very strong but that it did not lead to rapid inflation. In that experience, low unemployment allowed for solid wage gains, and it pulled new people into the labor market.“We should not kill off job growth and good growth as long as it doesn’t produce inflation,” she said. “If we could get 2019 again, I’d be all for it — why not?”We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Nobel Economics Prize Awarded to Daron Acemoglu, Simon Johnson and James Robinson

    Daron Acemoglu, Simon Johnson and James Robinson shared the award for their work on explaining the gaps in prosperity between nations.Daron Acemoglu, Simon Johnson and James Robinson received the prize for their work on explaining inequality between countries.Christine Olsson/TT News Agency, via Associated PressThe Nobel Memorial Prize in Economic Sciences was awarded on Monday to Daron Acemoglu and Simon Johnson, both of the Massachusetts Institute of Technology, and to James Robinson of the University of Chicago.They received the prize for their research into how institutions shape which countries become wealthy and prosperous — and how those structures came to exist in the first place.The laureates delved into the world’s colonial past to trace how gaps emerged between nations, arguing that countries that started out with more inclusive institutions during the colonial period tended to become more prosperous. Their pioneering use of theory and data has helped to better explain the reasons for persistent inequality between nations, according to the Nobel committee.“Reducing the huge differences in income between countries is one of our times’ greatest challenges,” Jakob Svensson, chairman of the economics prize committee, said while announcing the award. Thanks to the economists’ “groundbreaking research,” he said, “we have a much deeper understanding of the root causes of why countries fail or succeed.”According to the researchers, prosperity today is partly a legacy of how a nation’s institutions evolved over time — which they studied by looking at what happened to countries during European colonization.Countries with “inclusive” institutions that protected personal property rights and allowed for widespread economic participation tended to end up on a pathway to longer-term prosperity. Those that had what the researchers called “extractive” institutions — ones that helped elites to maintain control, but which gave workers little hope of sharing in the wealth — merely provided short-term gains for the people in power.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Russian Oil Flows Through Western ‘Price Cap’ as Shadow Fleet Grows

    A report shows how Russia has largely evaded sanctions aimed at limiting its revenue from oil sales.A plan hatched by wealthy Western nations to deprive Russia of oil revenue is largely faltering, a new report found, with the majority of the Kremlin’s seaborne oil exports evading restrictions that were supposed to limit the price of Russian crude.Almost two years since an oil “price cap” was enacted, nearly 70 percent of the Kremlin’s oil is being transported on “shadow tankers” that are evading the restrictions, according to an analysis published by the Kyiv School of Economics Institute, a Ukraine-based think tank.Russia’s success at circumventing the sanctions imposed by the Group of 7 nations has allowed it to continue to finance its war against Ukraine. The effectiveness of the price cap has been marred by loose enforcement of the policy. Officials in the United States and Europe have tried to balance their goals of crippling Russia’s economy while keeping oil markets well supplied to prevent price spikes.The challenges underscore the limitations that the world’s advanced economies have been facing as they attempt to intervene in global energy markets to try to hasten an end to Russia’s invasion of Ukraine.The Kyiv School of Economics Institute, which has argued for tougher sanctions on Russian oil, noted in its report that Russia’s shadow fleet poses a threat to the world’s oceans because the tankers are often poorly maintained and not properly insured.“There have been several instances of shadow tankers being involved in collisions or coming close to running aground in recent months,” the report said. “Large oil spills have so far been avoided but a major disaster is waiting to happen and cleanup costs would reach billions.”We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    How Kamala Harris’s Economic Plan Has Been Shaped by Business Leaders

    The vice president has repeatedly incorporated suggestions from business executives into her economic agenda.When two of Vice President Kamala Harris’s closest advisers arrived in New York last month, they were seeking advice. The Democratic nominee was preparing to give her most far-reaching economic speech, and Tony West, Ms. Harris’s brother-in-law, and Brian Nelson, a longtime confidant, wanted to know how the city’s powerful financiers thought she should approach it.Over two days, the pair held meetings across Wall Street, including at the offices of Lazard, an investment bank, and the elite law firm Paul, Weiss. Among the ideas the attendees pitched was to provide more lucrative tax breaks for companies that allowed their workers to become part owners, according to two people at the meetings. The campaign had already been discussing such an idea with an executive at KKR, the private equity firm.A few days later, Ms. Harris endorsed the idea during her speech in Pittsburgh. “We will reform our tax laws to make it easier for businesses to let workers share in their company’s success,” she said.The line, while just a piece of a much broader speech, was emblematic of Ms. Harris’s approach to economic policy since she took the helm of the Democratic Party in July. As part of a bid to cut into former President Donald J. Trump’s polling lead on the economy, her campaign has carefully courted business leaders, organizing a steady stream of meetings and calls in which corporate executives and donors offer their thoughts on tax policy, financial regulation and other issues.The private feedback has, in sometimes subtle ways, shaped Ms. Harris’s economic agenda over the course of her accelerated campaign. At several points, she has sprinkled language into broader speeches that business executives say reflects their views. And, in at least one instance, Ms. Harris made a specific policy commitment — to pare back a tax increase on capital gains — after extended talks with her corporate allies.This article is based on interviews with more than two dozen campaign officials, policy experts, donors, lobbyists and business leaders.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More