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Americans applied for U.S. passports in record volume in 2023 and passport processing delays are lengthy as a result.
The State Department recommends applying for a passport at least six months ahead of travel or passport expiration.
A routine passport now takes 10 to 13 weeks to process, plus another month for mailing.
There are some ways to get your passport faster, however.

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Passport applications are at an all-time high

More Americans planned trips abroad this year as their pandemic-era health fears waned and countries largely reopened their borders to visitors.
The State Department issued a record 22 million passports in fiscal 2022. It’s on track to break that record again in fiscal 2023, which ends Sept. 30, a spokesperson said.
Secretary of State Antony Blinken testified to Congress in March that the volume of passport applications has been “unprecedented.” Applications typically ebb and flow with the seasons, peaking from March to late summer, but “basically it’s full time now,” Blinken said.

The State Department also had to restaff positions that were reassigned or eliminated when passport demand cratered in 2020 at the beginning of the Covid-19 pandemic.

How to get your passport faster

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The State Department’s six-month recommendation takes into account longer processing times, as well as padding for things such as mailing on both ends of the process.
Americans should review current processing times before making any definite or nonrefundable travel plans, a State Department spokesperson said.
A routine passport application currently takes 10 to 13 weeks to process, according to the State Department. A traditional passport — a passport book — costs $130. First-time applicants must pay an additional $35 acceptance fee.
Travelers can pay more for faster service. Expedited passport processing costs an extra $60. Expedited passports currently take seven to nine weeks.
For comparison, before the pandemic, it took two to three weeks for expedited passports and six to eight weeks for routine passport processing, the State Department said. It hopes to return to that cadence by year’s end.
The time estimates for expedited and routine passports haven’t changed since March 24.

Processing estimates don’t include mailing times. That may take an additional month — up to two weeks for applications to arrive at a passport agency or center, and another two weeks to receive a printed passport.
Travelers can buy expedited delivery of a new passport book by mail — for delivery in one to two days — for an extra $19.53.
They can also send an application more quickly by purchasing Priority Mail Express service from the United States Postal Service. The price varies depending on the area of the country, according to the State Department.
In some circumstances, travelers may be able to speed up the process further.
Life-or-Death Emergency Service is available for people with a qualified emergency who are traveling abroad in the next three business days. Urgent Travel Service is for those traveling abroad within 14 calendar days for those who haven’t yet applied for a passport, or five days for those who have already applied.
Whether you’ve opted for routine processing or some form of expedited help, you can check your application status online and sign up for email updates.

A soon-to-expire passport may still cost you

Jose A. Bernat Bacete | Moment | Getty Images

U.S. passports are generally valid for 10 years. They’re valid for five years if issued before age 16.
In some cases, Americans may not be allowed to travel even if their passport hasn’t yet expired. Some countries disallow entry if a passport’s expiration falls just a few months after a trip’s end date.
For example, the Schengen Area, which encompasses 27 countries in the European Union, requires a U.S. passport be valid for at least 90 days beyond your date of departure from your home country.
Many countries in the Asia-Pacific and Middle East require at least six months of validity for permission to enter. Other areas, such as Hong Kong and Macau, require one month.
“Even if you don’t have a trip on the books yet, but your passport is going to expire sometime in the first half of 2024, I’d absolutely just renew it now,” Sally French, a travel expert at NerdWallet, previously told CNBC.
You may also need to apply for a separate visa to enter certain nations, a process that requires additional time and planning. The State Department has information about passport and visa requirements for specific countries. More

A shopper for Instacart navigates through the aisles as she shops for a customer.
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The Great IPO Reopening may be on hold: rising rates and lower stocks are an IPO killer. 
A combination of still-high valuations, a mediocre reception for the latest crop of IPOs and poor market conditions may force The Great IPO Reopening to be put on hold. 

Instacart on Thursday broke below its initial price of $30 before closing at $30.65. Arm Holdings yesterday broke below its initial price of $51 before closing at $52. Klaviyo hit $31.30 when it opened on Thursday, barely above its initial price of $30, before closing at almost $34. 
And what about the earlier crop of IPOs? Not so good. 
Restaurant chain Cava was the first IPO to get everyone excited, way back in June. It priced at $22, opened at $42, and went to $55 shortly after. It’s now at $30, still above its initial price the victim of massive selling the past two weeks. 
Kenvue, the Johnson & Johnson spinoff, went public in May at $22, traded in the high $20s for a couple months, and has now broken below its initial price of $22. 
Cosmetics firm Oddity Tech priced at $35 in July, opened around $49, and is now $28, well below its $32 initial price. 

Throw in the seasonal weakness and macroeconomic worries, particularly higher interest rates, and it’s likely many executives of IPO hopefuls who are looking to go public in October or November are chewing their fingernails.
Unfortunately, the alternatives are not very appealing. 
Bad news now outweighs the good 
The good news: deals are getting done. 
The bad news: these early companies are the strong ones, and their mediocre reception, even with tiny floats, does not bode well for the hundreds of tech IPO hopefuls, most of whom are not profitable and would still like to avoid taking the massive haircuts that would be necessary to successfully float them in the public markets. 
I noted earlier in the week that there was broad agreement that a successful IPO candidate needed to: 1) be profitable or on a very clear path to profitability, and 2) have a lower valuation. 
The bad news is, some of these tech unicorns will likely pass on taking a huge public haircut. I spoke earlier this week with Nizar Tarhuni, vice president of research at Pitchbook, who estimated there are roughly 800 or so tech unicorns that on average haven’t raised capital in more than 17 months. 
“They’re going to need to raise soon and the pricing dynamics don’t look great,” he told me. 
This leaves those unicorns with three choices: 1) raise additional capital in the private markets, 2) merge or be bought out; or 3) move into the public markets. 
Tarhuni noted that venture capital firms still have dry powder, but that they will be focusing on helping the companies with the highest probability of success. In this environment, that means companies that are already turning an operating profit.
What about the rest? Those that cannot or will not meet the criteria to successfully go public and cannot keep raising private capital will be forced to merge or be bought. That means lots of potential business for distressed M&A firms. 
Finally, a smaller percentage will take their medicine and move into the public markets (a few may take the SPAC route), but will have to accept a lower valuation. 
The macro outlook is the real IPO killer 
This month, the 10-year yield has gone to 4.48% from 4.10%, a rise of almost 40 basis points. (A basis point is 0.01%). The S&P 500 is down 2.7% in September. 
That combination — rapidly rising rates plus a down stock market — is the classic IPO killer. 
This is happening just as the next crop of IPO hopefuls is looking to go public in mid-October. 
Hopefully, by then interest rates will calm down, and stocks will get past the seasonal weakness of September and October. 
But if instead the 10-year yield is up another 40 basis points (near 5%), and the S&P 500 is down another 2.5%-5% or more, a lot of those IPO hopefuls are going to be postponing that decision.  More

A paramedic prepares doses of AstraZeneca vaccine for patients at a walk-in COVID-19 clinic inside a Buddhist temple in the Smithfield suburb of Sydney on August 4, 2021.
Saeed Khan | AFP | Getty Images

Check out the companies making headlines in early trading.
AstraZeneca — Shares of the British pharmaceutical company gained more than 2.7% in premarket trading after the company reported positive results for its drug Dato-DXd in a trial for treating a common type of breast cancer.

Wayfair — Shares gained more than 2% after Bernstein upgraded home merchandiser to market perform from underperform. The firm cited improving revenue growth and margin commentary.
Chinese e-commerce stocks  —  U.S. listed shares of Alibaba and PDD Holdings added nearly 4% in premarket trading, while JD.com rose 3.3%. Bloomberg reported that China is considering easing rules that cap foreign investment in domestic publicly traded companies.  
Seagen — Shares of the biotech firm rose nearly 4% in premarket trading after the company reported positive topline results from a clinical trial of treatment for patients with previously untreated bladder cancer. The results showed the treatment improved both overall survival and progression-free survival, compared with chemotherapy.
Deere — The tractor manufacturer fell around 1% after Canaccord Genuity downgraded shares to hold from buy, citing slowing growth for large agricultural equipment and normalizing dealer inventories.  
Arm Holdings — Shares of the chip designer added 1.3% during premarket trading. The stock jumped nearly 25% during its public trading debut but is now trading just above its $51 IPO price. Susquehanna initiated a neutral rating on the company in a Friday note.

Charter Communications – Shares gained about 2% after Wells Fargo upgraded Charter Communications to an overweight rating, saying that its mobile roll-to-pay offering and rural growth should contribute to accelerating EBITDA and free cash flows.
Ralph Lauren — The clothing brand’s shares ticked up nearly 1% after Raymond James initiated an overweight rating in a note Thursday evening. Analyst Rick Patel forecasts 20% upside potential from where shares closed on Thursday. 
Yeti — Shares fell about 0.4% premarket. Jefferies on Friday called Yeti a “best-in-class” favorite in drinkware, even as the market expands to new entrants.
— CNBC’s Pia Singh, Sarah Min, Samantha Subin, Tanaya Macheel, Brian Evans and Michelle Fox contributed reporting More

People flocked to a flagship Apple store in downtown Beijing on Friday morning to pick up the iPhone 15.
As of 10 a.m. Beijing time on Friday, iPhone 15 sales via JD’s Dada one-hour delivery app surged by 253% versus that of the iPhone 14 last year, Dada said.
Counterpoint Research’s most optimistic outlook for Apple in China predicts a 4% year-on-year decline in Apple shipments in the fourth quarter.

Hundreds of people lined up at a flagship Apple store in Beijing to pick up the new iPhone 15 when deliveries began on Friday.
CNBC | Evelyn Cheng

BEIJING — People flocked to a flagship Apple store in downtown Beijing on Friday morning to pick up the latest iPhone, despite market worries that nationalistic fervor would dampen the U.S. company’s sales in China.
Many also ordered the phone for delivery. As of 10 a.m. Beijing time on Friday, iPhone 15 sales via JD’s Dada one-hour delivery app surged by 253% versus that of the iPhone 14 last year, Dada said.

In the first 10 minutes after deliveries began at 8 a.m., the company said 25,000 phones were on their way to customers. Dada said this year it is working with 4,600 authorized Apple retailers in China — up from 500 in 2020.

Apple started delivering the iPhone 15 on Friday after pre-orders began on Sept. 15. This year’s release comes as the smartphone giant faces economic and political headwinds in its third-largest market.
About two weeks prior to Apple’s launch event this month, Chinese telecommunications giant Huawei quietly released its Mate 60 Pro in China with a reportedly 5G-capable chip from SMIC. That’s despite U.S. sanctions since 2019 which have almost wiped out Huawei’s smartphone business.

However, for people waiting in line at the Apple store, there was a general ambivalence about the phone brand.
One man, surnamed Zhao, said he’d wanted to buy Huawei’s new phone, but it sold out the moment he tried to buy it online. “Since I couldn’t get the Mate 60 I decided to get the new iPhone instead,” he said in Mandarin, translated by CNBC. “I don’t think there’s too much of a difference.”

I don’t feel it’s patriotic to get one brand or another. Don’t Huawei and Apple both pay taxes to China?

iPhone buyer in China

Zhao declined to share his first name due to the sensitivity of the matter. He was 10th in line at the Apple store in Sanlitun, Beijing, and said he arrived at 6:30 a.m. The first person in line, who also requested anonymity, said he’d arrived at 1 a.m.
Huawei’s phone might slow down in about two to three years, while Apple’s system might last a bit longer — maybe four to five years, according to Zhao. “But I’m going to change to a new phone in two to three years anyway, so it’s about the same to me.”
“I don’t feel it’s patriotic to get one brand or another. Don’t Huawei and Apple both pay taxes to China? Apple probably pays more,” he said. Zhao said he was planning to upgrade from his Huawei device to buy the iPhone 15 Pro Max, which has a list price of 9,999 yuan ($1,370).

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In early September, The Wall Street Journal reported, citing sources familiar with the matter, that central government employees were ordered not to bring iPhones to the office or use them for work. It was not clear how new or wide-reaching any such order was. Bloomberg, citing sources familiar with the situation, also reported a ban on iPhones at work could spread to other state-affiliated agencies.
China’s Ministry of Foreign Affairs said the country hadn’t issued bans on the purchase or use of Apple iPhones.

Based on the current pre-ordering results, we do see that Apple will still be resilient in its sales, though it faces challenges…

senior researcher at IDC

Apple did not immediately respond to a CNBC request for comment on the reports or its iPhone 15 sales in China.
Shares of Apple, the largest U.S. stock by market capitalization, are down by about 7% so far this month.

Strong iPhone 15 pre-sales

Apples’ iPhone 15 pre-sales in China pointed to robust demand. Earlier this week, CNBC checks of online shopping sites JD.com and Alibaba’s Tmall showed the more expensive iPhone 15 Pro and Pro Max were essentially sold out, with delivery wait times of about a month or more.
“Based on the current pre-ordering results, we do see that Apple will still be resilient in its sales, though it faces challenges like Huawei’s new products and the absence of the usual buzz on China’s social media,” said Will Wong, senior researcher at IDC, a market research firm.
“We are expecting a 5%-6% YoY growth for Apple’s overall shipments” in China in the second half of this year, he said. However, he noted pre-order results don’t necessarily represent the final sales number and that last year, China was still dealing with Covid-19.

Consumers living outside big cities such as Beijing, Shanghai and Hangzhou also wanted to buy the new iPhone. Orders from less developed cities surged by six times versus last year, according to Dada.

Apple’s China headwinds

China accounts for nearly 20% of Apple’s revenue. The company’s Greater China net sales rose by nearly 8% year-on-year to $15.76 billion in the second quarter, versus a 5.6% decline in the Americas market to $35.38 billion.
That’s despite economic data that’s pointed to a broader slowdown. China’s retail sales rose by 4.6% in August from a year ago, following 2.5% growth in July.
On top of slowing growth in China, the market is highly competitive.
Huawei is set to hold a product launch on Monday. Foldables, a category Apple has yet to enter, have also grown popular in China.

Read more about China from CNBC Pro

Counterpoint Research’s most optimistic outlook for Apple in China predicts a 4% year-on-year decline in Apple iPhone shipments in the fourth quarter.
The firm’s worst-case scenario predicts a 15% year-on-year decline.
“We must acknowledge the existence of initial supply constraints, particularly for the Pro series. This has manifested in longer delivery times for pre-orders over the past two days,” Tarun Pathak, research director at Counterpoint Technology Market Research, said in an email Wednesday.
“If these supply issues persist without a prompt resolution, it would necessitate us leaning towards the bearish case.”

Pathak noted that Huawei’s decline allowed the iPhone to “attract a massive number of consumers” in the $600-plus price category, and said iPhone 11 and iPhone 12 users would likely want to upgrade to the iPhone 15.
The firm said iPhone 15 pre-sales on JD.com exceeded 3 million units.
JD.com did not immediately respond to a CNBC request for comment.
However, Shanghai-based CINNO Research had a more pessimistic outlook as of Wednesday: A 22% drop in overall iPhone 15 unit sales versus that of the iPhone 14 in China.
That’s still about 10 million iPhone 15s, for an expected total of 45.5 million iPhones sold in China this year, a 2% decline from a year ago, CINNO Research said.
CINNO blamed this on the “economic downturn” and impact of Huawei’s new Mate 60 Pro. Indeed, there has been a lot of focus on Huawei’s latest device. At its height, the Chinese technology giant was Apple’s closest competitor in China’s high-end smartphone market. Any kind of serious bid from Huawei to regain a foothold in China could add pressure on China.
“There’s no doubt that the new Mate 60 series will be a challenge to the iPhone this year,” Counterpoint Research’s Pathak said.
— CNBC’s Eunice Yoon contributed to this report. More

Singapore-headquartered Silent Eight wants to be “IPO ready” by the end of 2025 with a view to listing on the tech-heavy Nasdaq in the U.S, its CEO Martin Markiewicz told CNBC.
Silent Eight uses artificial intelligence (AI) to help financial institutions fight money laundering and other financial crimes.
Markiewicz told CNBC that he forecasts revenue to grow more than three-and-a-half times in 2023 versus last year.

The co-founders of Silent Eight, from left to right: Michael Wilkowski, Julia Markiewicz and Martin Markiewicz.
Silent Eight

WARSAW — When it comes to financial crime, banks can often be “one decision away from a huge mess,” Martin Markiewicz, CEO of Silent Eight told CNBC.
That’s because the risk of fines and reputational damage is high if financial firms don’t do enough to stamp out crimes like money laundering and terrorist financing. But it takes huge amount of time and resources to investigate and prevent such activities.

Markiewicz’s company uses artificial intelligence (AI) to help financial institutions fight these issues in a bid to cut the amount of resources it takes to tackle crime, keeping banks in the good books of regulators.
“So our grand idea for a product … (is that) AI should be doing this job, not necessarily humans,” Markiewicz said in an interview on Thursday at a conference hosted by OTB Ventures. “So you should have a capacity of a million people and do millions of these investigations … without having this limitation of just like how big my team is.”
With Silent Eight’s revenue set to see threefold growth this year and hit profitability for the first time, Markiewicz wants to get his company in position to go public in the U.S.

How AI can catch criminals

Silent Eight’s software is based on generative AI, the same technology that underpins the viral ChatGPT chatbot. But it is not trained in the same way.
ChatGPT is trained on a so-called large language model, or LLM. This is a single set of huge amounts of data, allowing prompt ChatGPT and receive a response.

Silent Eight’s model is trained on several smaller models that are specific to a task. For example, one AI model looks at how names are translated across different languages. This could flag a person who is potentially opening accounts with different spellings of names across the world.
These smaller models combine to form Silent Eight’s software that some of the largest banks in the world, from Standard Chartered to HSBC, are using to fight financial crime.
Markiewicz said Silent Eight’s AI models were actually trained on the processes that human investigators were carrying out within financial institutions. In 2017, Standard Chartered became the first bank to start using the company’s software. But Silent Eight’s software required buy-in from Standard Chartered so the start-up could get access to the risk management data in the bank to build up its AI.
“That’s why our strategy was so risky,” Markiewicz said.
“So we just knew that we will have to start with some big financial institutions first, for the other ones to know that there is no risk and follow.”
As Silent Eight has onboarded more banks as customers, its AI has been able to get more advanced.
Markiewicz added that for financial institutions buying the software, it is “orders of magnitude” cheaper than paying all the humans that would be required to do the same process.
Silent Eight’s headquarters is in Singapore with offices in New York, London, and Warsaw, Poland.

IPO ahead

Markiewicz told CNBC that he forecasts revenue to grow more than three-and-a-half times in 2023 versus last year, but declined to disclose a figure. He added that Silent Eight will be profitable this year with more and more financial institutions coming on board.
HSBC, Standard Chartered and First Abu Dhabi Bank are among Silent Eight’s dozen or so customers.
The CEO also said the company is not planning to raise money following a $40 million funding round last year, that was led by TYH Ventures and welcomed HSBC Ventures, as well as existing investors which include OTB Ventures and Standard Chartered’s investment arm.
But he said Silent Eight is getting “IPO ready” by the end of 2025 with a view to listing on the tech-heavy Nasdaq in the U.S. However, this doesn’t mean Silent Eight will go public in 2025. Markiewicz said he wants the company to be in a good position to go public, which means reporting finances like a public company, for example.
“It’s an option that I want to have, not that there’s some obligation or some investor agreement that I have,” Markiewicz said. More

A sign is posted in front of a Broadcom office in San Jose, California, on June 3, 2021.
Justin Sullivan | Getty Images News | Getty Images

Check out the companies making headlines in midday trading.
Cisco Systems, Splunk — Shares of Cisco fell 3.9% Thursday after the company said it is acquiring cybersecurity software company Splunk for $157 per share in a cash deal worth about $28 billion. Splunk’s stock price popped 19.1% on news of the deal.

KB Home — The homebuilder stock slid 4.3% after saying it expected its gross housing margin to shrink in the current quarter. KB Home posted its fiscal third-quarter report Wednesday evening, reporting earnings of $1.80 per share on revenue of $1.59 billion. Analysts polled by LSEG, formerly known as Refinitiv, called for earnings of $1.43 per share and revenue of $1.48 billion.
Fox Corporation, News Corp — Shares of Fox Corporation and News Corp gained 3.2% and 1.3%, respectively, on news Thursday that Rupert Murdoch is stepping down as chairman of both companies. 
Broadcom — Shares of Broadcom moved lower by almost 2.7%. The action follows a report by The Information that Google is holding internal discussions about dropping the artificial intelligence chip supplier in favor of its own internally developed chips as soon as 2027. A Google spokesperson later told CNBC that the company is “productively engaged” with Broadcom and other suppliers for the “long term.” “Our work to meet our internal and external Cloud needs benefit from our collaboration with Broadcom; they have been an excellent partner and we see no change in our engagement,” the spokesperson said
Eli Lilly — Shares were down 3.4% after the company earlier this week sued several clinics and pharmacies across the U.S. for allegedly selling cheaper, unauthorized versions of the company’s diabetes drug Mounjaro.
Klaviyo — The marketing automation company stock closed Thursday roughly 2.9% higher. Shares of Klaviyo opened Wednesday at $36.75 on the New York Stock Exchange, which was greater than the company’s offering price of $30 per share.

PulteGroup, Zillow Group, D.R. Horton — Shares of companies in the housing industry fell Thursday after data showed U.S. existing home sales fell in August as tight supply raised prices. PulteGroup was down 3.3%, while both D.R. Horton and Zillow lost 3.7%.
FedEx — Shares gained 4.4% a day after the company reported mixed fiscal first-quarter earnings. FedEx reported adjusted earnings of $4.55 per share, greater than the $3.73 forecast by analysts polled by LSEG. Its revenue of $21.68 billion came in below expectations of $21.81 billion.
Paramount, Netflix, Disney — Shares of streaming companies moved higher as writers and producers neared a potential end to the Writers Guild of America strike, people close to the negotiations told CNBC’s David Faber on Wednesday. Paramount was about 0.5% higher, while Netflix lost 0.6% and Disney added 0.2%, taking back earlier gains.
— CNBC’s Alex Harring, Tanaya Macheel and Samantha Subin contributed reporting. More

The Bank had been hiking rates consistently since December 2021 in a bid to rein in inflation, taking its main policy rate from 0.1% to a 15-year high of 5.25% in August.
The Monetary Policy Committee voted 5-4 in favour of maintaining this rate at its September meeting, with the four members preferring another 25 basis point hike to 5.5%.

A passageway near the Bank of England (BOE) in the City of London, U.K., on Thursday, March 18, 2021.
Hollie Adams | Bloomberg | Getty Images

LONDON — The Bank of England on Thursday ended a run of 14 straight interest rate hikes after new data showed inflation is now running below expectations.
The Bank had been hiking rates consistently since December 2021 in a bid to rein in inflation, taking its main policy rate from 0.1% to a 15-year high of 5.25% in August.

The British pound dropped 0.7% against the U.S. dollar shortly after the decision.
The Monetary Policy Committee voted 5-4 in favour of maintaining this rate at its September meeting, with the four members preferring another 25 basis point hike to 5.5%.
“There are increasing signs of some impact of tighter monetary policy on the labour market and on momentum in the real economy more generally,” the Bank said in a statement.
“The MPC will continue to monitor closely indications of persistent inflationary pressures and resilience in the economy as a whole, including the tightness of labour market conditions and the behaviour of wage growth and services price inflation.”
The MPC also unanimously votes to cut its stock of U.K. government bond purchases by £100 billion ($122.6 billion) over the next 12 months, to a total of £658 billion.

Investors on Wednesday ramped up bets that the Bank would pause its interest rate hiking cycle after U.K. inflation came in significantly below expectations for August.
The annual rise in the headline consumer price index dipped to 6.7% from the 6.8% of July, defying a consensus forecast that it would rise to 7%, as easing food and accommodation prices offset a hike in prices at the pump. Notably, core CPI — which excludes volatile food, energy, alcohol and tobacco prices — dropped to 6.2% from July’s 6.9%.
Early Thursday morning, money markets were split roughly 50-50 on whether the Bank would pause or opt for another 25 basis point hike, according to LSEG data, before swinging back to 60-40 in favor of a hike in the hour before the decision.
“Inflation is falling and we expect it to fall further this year. That is welcome news,” Bank of England Governor Andrew Bailey said in a video statement.
“Our previous increases in interest rates are working, but let me be clear that inflation is still not where it needs to be, and there is absolutely no room for complacency. We’ll be watching closely to see if further increases are needed, and we will need to keep interest rates high enough for long enough to ensure that we get the job done.”
Job ‘nearly done for now’
The Bank of England has been treading a narrow path between bringing inflation back to Earth and tipping the so far surprisingly robust economy into recession. U.K. GDP shrank by 0.5% in July, while a number of British companies issued profit warnings on Tuesday.
“While it may return to raising rates later in the year or into next year, the Bank of England has been bold and is signalling that its job is nearly done for now,” said Marcus Brookes, chief investment officer at Quilter Investors.
“Inflation surprised to the downside yesterday and with economic data rolling over, the BoE clearly feels it now has enough cover to hit the pause button and assess things as we go.”
The U.S. Federal Reserve on Wednesday also held its interest rates steady, but indicated that it still expects one more hike before the end of the year, along with fewer cuts in 2024 than previously anticipated.
Brookes suggested the MPC will have one eye on the U.S., where sentiment remains hawkish, but where the economy is in a stronger position to absorb a further rate rise.
Thomas Verbraken, executive director of risk management research at MSCI, said the burning question is whether the Bank of England’s Thursday decision signals the peak of the interest rate cycle.
“The rationale is that a steady rate can squeeze the economy more gently, averting heightened risks to financial stability and corporate defaults, while more effectively transmitting higher rates into fixed mortgage rates,” he said in an email.
Hussain Mehdi, macro and investment strategist at HSBC Asset Management, said there is now a “good chance” that the Bank of England’s main policy rate has peaked, along with those of the Fed and the European Central Bank.
“Although the latest U.K. pay growth numbers are a cause for concern, labour market data is lagging. Forward looking indicators suggest the U.K. economy is already flirting with recession, a backdrop consistent with cooling wage growth and a policy pivot,” Mehdi said.
“We believe ongoing restrictive policy settings indicate there is a strong likelihood of developed markets entering recession in 2024.” More

When economists pass judgment on exchange-rate regimes, they like to invoke the monetary-policy “trilemma”. A country might want a stable currency, free capital flows and an independent monetary policy, which can respond to the needs of the domestic economy, regardless of what central banks elsewhere are doing. There are, however, intrinsic tensions between these objectives. And so, sad to say, a country can choose only two of the three.The trilemma is a canonical bit of theory. In practice, however, the choice is not so stark. No country can have all three blessings in full. But some countries, such as China, like a little of each.image: The EconomistThis year, for example, China has tried to go its own way in monetary policy. A property slump, low consumer morale and falling exports have marred the economy’s reopening from covid-19, contributing to dangerously low inflation. In response, China’s central bank has eased its monetary stance, even as interest rates have risen dramatically in America and elsewhere. It lowered reserve requirements for banks on September 15th for the second time this year. It has also twice cut interest rates.China’s slowdown and its monetary response have, predictably, weighed on the yuan. From mid-January, when euphoria about China’s reopening peaked, to September 8th, the yuan fell by 9% against the dollar. On the face of it, this is a good thing. A weaker currency should boost exports and ward off deflation. According to Goldman Sachs, a bank, a sustained 10% drop in the yuan against China’s trade partners could add 0.75 percentage points to China’s growth, which is struggling to reach 5% this year. It could also increase consumer-price inflation, which is near zero, by one percentage points in the long term.China, however, would also like a little currency stability to go with its monetary independence. It fears that sharp declines in the yuan can lead investors to expect further falls. It still bears the scars of 2015, when a devaluation triggered heavy capital outflows. The central bank thus feels inhibited in its exercise of monetary autonomy. Its rate cuts have been small—only 0.1 percentage points each time for the short-term rate. They have also been discreet. In June it cut this seven-day rate two days earlier than such moves are normally made, notes Becky Liu of Standard Chartered, another bank, perhaps to avoid too conspicuous a clash with the monetary-policy meeting of America’s Federal Reserve.China’s central bank has also tried to prop up the yuan. Officials have told speculators not to take one-sided bets. They have cut foreign-exchange reserve requirements for banks, releasing dollars into the system. The central bank has tightened yuan liquidity offshore, making it harder for speculators to borrow yuan in order to sell it. The central bank’s own foreign-exchange reserves fell by $44bn in August, not all of which can be easily accounted for by changes in the valuation of assets it holds. This raises the possibility that the bank intervened modestly itself.China’s distinctive exchange-rate system also gives the central bank a chance to intervene in another way. The yuan is not allowed to float by more than 2% above or below a “fix”, which the bank calculates each morning. The fix is supposed to reflect the previous day’s market forces. But the bank sometimes introduces what it calls a “countercyclical factor” (ie, a fudge factor) into its calculations. This has allowed it to set the fix at a rate that is stronger than the previous day’s close. Indeed, in recent days there has been more fudge in the fix than ever before.These interventions have enjoyed some success. The yuan has stopped falling against the trade-weighted basket of currencies that the authorities use as a benchmark for managing its value. The currency is also a little stronger against the dollar than it was early in the month.All this intervention comes at a cost. It tightens financial conditions, undoing some of the monetary easing the central bank is pursuing. Although a slightly more stable yuan can be engineered, it produces a somewhat less powerful monetary stimulus. China can have a little of everything. But not too much of anything. ■For more expert analysis of the biggest stories in economics, finance and markets, sign up to Money Talks, our weekly subscriber-only newsletter. More