FirstFT: Central bankers call for quick action to curb inflation

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The world’s top central bankers have warned that the era of low interest rates and moderate inflation has come to an end following the “massive geopolitical shock” of Russia’s invasion of Ukraine and the Covid-19 pandemic.

At the European Central Bank’s annual conference, Christine Lagarde, its president, Jay Powell, Federal Reserve chair, and Andrew Bailey, Bank of England governor, called for rapid action to curb inflation.

They said failing to raise interest rates quickly enough could allow high inflation to become embedded and ultimately require more drastic action by central banks to bring down price growth.

“The process is highly likely to involve some pain, but the worst pain would be from failing to address this high inflation and allowing it to become persistent” — Jay Powell

Speaking in Sintra, Portugal, central bank bosses also warned that the splintering of the global economy into competing blocs risked fracturing supply chains, reducing productivity, raising costs and reducing growth.

Do you think central bankers are taking the right approach to curb inflation? Share your thoughts at [email protected]. Thanks for reading FirstFT Europe/Africa. Here’s the rest of today’s news — Jennifer

The latest from the war in Ukraine:

  • Russian grain blockage: Moscow is using talks aimed at ending a blockade of Ukrainian seaports to dominate the Black Sea, Kyiv’s top negotiator said.

  • Nato: Joe Biden’s administration expressed support for Turkey’s purchase of US fighter jets after Ankara dropped a veto on Finland and Sweden joining Nato. The war has prompted the alliance to bring back its cold war posture.

  • Sanctions: The UK has imposed sanctions on Vladimir Potanin, one of Russia’s richest oligarchs, along with several other individuals.

  • Opinion: Beijing is emerging as a winner from the unfolding confrontation between Moscow and the democratic world, writes author Kirill Rogov.

1. UK Spac targets crushed by sell-off Ventures that went public via a merger with a special purpose acquisition company in the last two years have lost an average 61 per cent of their value as investors dump once-hot start-ups.

2. Megadeals buoy global M&A A wave of big deals carried mergers and acquisitions volumes to $2tn in the first half of the year, with 25 deals worth more than $10bn announced, even as inflation, interest rate rises and the Ukraine war hit confidence and caused significant deals to fall through. Overall deal volume has fallen by a fifth from a record 2021.

3. Three Arrows falls into liquidation The crypto hedge fund, which is based in Singapore and registered in the British Virgin Islands, has fallen into liquidation, becoming the latest high-profile victim of the credit crisis sweeping through the digital asset market.

4. Terrorists behind 2015 Bataclan attack sentenced to life A French court convicted 20 men of carrying out or aiding Islamist terrorist attacks that killed 130 people in Paris in 2015, following a trial that tested the judicial system and revived painful memories for victims.

5. Jim Chanos’s next ‘big short’ The hedge fund manager, best known for predicting the collapse of Enron two decades ago, is raising several hundred million dollars for a fund that will take short positions in US-listed real estate investment trusts that own “legacy” warehouse data centres, he told the Financial Times.

Thank you to everyone who took part in yesterday’s poll. Fifty-two per cent of respondents said the G7 was right to water down fossil fuel pledges over energy supply fears, while 40 per cent said it was not.

The day ahead

Economic data The UK publishes final first-quarter gross domestic product, a consumer trends report and Nationwide’s June house price data. Unemployment figures are out for the EU, Germany and Italy, as are France’s May producer price index and June consumer price index. ECB president Christine Lagarde delivers a speech at the first meeting of the Simone Veil Pact, organised by Renew Europe.

UK steel tariffs expire Five “safeguard” measures introduced in 2018 during Donald Trump’s presidency to protect producers from cheap international steel are due to expire. The Department for International Trade is set to confirm plans to extend the tariffs for another two years.

EY upheaval The Big Four firm’s US boss Kelly Grier is due to step down after a power struggle with global chief Carmine Di Sibio. Grier will be replaced by Julie Boland, who won a partner election in February. The moves come as EY weighs plans to split its audit and advisory practices.

Walgreens Boots Alliance earnings The pharmacy chain reports third-quarter results days after it announced it had abandoned the sale process for the Boots chain in the UK following upheaval in credit markets that resulted in bids below its expectations.

Spirit Airlines shareholders vote Ballots will be cast on a takeover by rival Frontier, initially announced in February, which would give the combined carrier an equity value of more than $4bn. Sujeet Indap explores the takeover battle for the US budget airline in the latest edition of the Lex Newsletter. Sign up to receive it in your inbox every Wednesday and Friday.

What else we’re reading

The fixer, the cheat and the corruption crisis in tennis Few sports are as tuned for cheating as tennis. From the sidelines, it can be difficult to distinguish a player who is having a bad day from one who is losing on purpose. That corruption lies at the heart of Nicolás Kicker’s story.

Nicolás Kicker serves on a clay court
Global tennis has been grappling with fixing problems for the past 15 years

Would carbon food labels change the way you shop? Environmentally friendly food shopping can be a challenge, as consumers demand “honest, transparent labelling of food”. Find out how your favourite UK supermarket items stack up in terms of carbon cost with our interactive scales.

US baby formula crisis spurs market reform debate Abbott Laboratories, a $180bn healthcare company, is facing a political firestorm after a safety scandal forced it to shutter a Michigan plant, triggering an infant formula shortage and panic buying that forced Washington to approve emergency airlifts and drew scrutiny to a sector dominated by only two companies.

The reinvention of Hong Kong After three stormy years of protests and the coronavirus pandemic, China’s president Xi Jinping has hailed a “new era” for Hong Kong. But that future is likely to be less international and closer to the interests of mainland China. Beijing is tightening security ahead of Xi’s visit to mark the 25th anniversary of the city’s handover.

Armed robbery at Tefaf art fair Shocking scenes unfolded in Maastricht this week as a man with a sledgehammer smashed the glass-lined booth of ultra-high-end jewellers Symbolic & Chase. The offender was in a group of four well-dressed men, who stole unspecified items from the stand.

NFTs

French footballer Kylian Mbappé is following fellow superstars Cristiano Ronaldo and Lionel Messi into the world of non-fungible tokens, becoming an investor in SoftBank-backed fantasy football platform Sorare.

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