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Pound hits one-year high against dollar after UK inflation holds steady

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Pound hits one-year high against dollar after UK inflation holds steady

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The pound hit a one-year high against the dollar on Wednesday after UK inflation figures came in slightly above expectations at 2 per cent for June.

The consumer price data was above analysts’ forecasts of 1.9 per cent and prompted traders to reduce their bets that the Bank of England will lower interest rates from their current 16-year high next month.

But the inflation figure, provided by the Office for National Statistics, remained at the BoE’s target level, which it hit in May for the first time in three years.

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After the data release, investors put the probability of a quarter-point rate cut next month at about a third, having previously been evenly split.

The pound climbed 0.5 per cent to $1.3031, its strongest level against the dollar in a year.

The Monetary Policy Committee has signalled it is getting closer to lowering rates from their current 5.25 per cent. However such a move would hinge on policymakers being confident that underlying price pressures are fully under control.

A key concern has been stubborn services price growth, which is seen as an important gauge of underlying inflation. The latest figures showed services inflation holding steady at 5.7 per cent in June, ahead of analysts’ expectations for a decline to 5.6 per cent.

“It’s the stability of services inflation at 5.7 per cent that’s the blow,” said Paul Dales at Capital Economics. “As a result, the chances of an interest rate cut in August have diminished a bit more.”

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Wednesday’s data marked the final inflation release before the MPC’s August 1 meeting, at which it will announce its latest rate decision.

The higher than expected inflation figure came hours before the King’s Speech, which will lay out the new Labour government’s plans to “take the brakes off Britain” in a bid to spur economic growth.

“It is welcome that inflation is at target, but we know that for families across Britain, prices remain high,” said Darren Jones, chief secretary to the Treasury.

“That is why this government is taking the tough decisions now to fix the foundations so we can rebuild Britain and make every part of Britain better off,” he added.

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Restaurants and hotels were the biggest drivers of inflation in the year to June. Core inflation, which strips out energy and food, was 3.5 per cent, the same rate as in May and in line with analysts’ forecasts.

The BoE described its June decision to hold rates at 5.25 per cent as “finely balanced”, with two of the nine MPC members advocating to reduce rates.

Some other members have since signalled they are on the cusp of backing a rate cut, though the latest economic data may complicate their decision.

Huw Pill, the BoE’s chief economist, said this week that the central bank had made “substantial progress” in its efforts to bring price pressures down, but added that recent indicators had still pointed to “some upside risk”.

The MPC will also look at UK labour market data due to be released on Thursday for a further indication of the strength of the economy.

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“The continued persistence of wage growth and CPI inflation means the MPC will have to proceed only gradually,” said Rob Wood at Pantheon Macroeconomics, “and the uncertainty about underlying inflation pressure means we expect rate-setters to wait until September for their first reduction.”

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It Could Take Weeks Before Displaced L.A. Residents Can Go Home

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It Could Take Weeks Before Displaced L.A. Residents Can Go Home

The tens of thousands of people displaced by the devastating wildfires in the Los Angeles area are increasingly anxious to know when they can return home — or to what remains of their properties.

Officials say crews are working to reopen closed areas, snuffing out hot spots and clearing hazardous debris, but no timeline has been announced for lifting the evacuation orders.

Experts have warned that it could take weeks before people can return to the hardest-hit neighborhoods because of the amount of work needed to ensure the safety of residents.

Firefighters are still trying to contain the Palisades and Eaton fires, the biggest ones in the Los Angeles region, a prerequisite to allowing people to return. Both remained largely out of control on Wednesday evening, though their growth had slowed.

Captain Erik Scott of the Los Angeles Fire Department said the timeline for people returning to their neighborhoods can vary. It depends on the extent of the damage, which needs to be mapped and carefully assessed in every impacted community, he added. There is also the threat of hazardous materials, such as asbestos and chemicals.

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“We want people to have realistic expectations,” Mr. Scott said.

It took weeks in the aftermath of some previous destructive blazes for people to return. In 2018, the Camp fire destroyed most of Paradise in Northern California and killed 85 people. The final evacuation orders in that town were lifted more than a month after the fire started.

Similarly, after a devastating fire in Lahaina on the island of Maui killed more than 100 people in 2023, it was nearly two months before the first of the thousands of displaced residents could return to their properties.

The suppression of the fire is only one step in the process, according to fire officials. There are yet more safety and infrastructure issues to tackle. Workers need to clear and replace downed power lines, stabilize partially collapsed buildings and remove toxic ash from the ground.

“That’s why the orders are still in place,” said David Acuna, a battalion chief with Cal Fire. “It’s not just about the fire. There are all these other elements to address.”

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The grim search for human remains has further complicated efforts to clear neighborhoods. Officials are using cadaver dogs to comb through the thousands of structures damaged or destroyed in the fires to locate remains.

“We have people literally looking for the remains of your neighbors,” Sheriff Robert Luna of Los Angeles County said at a news conference on Monday. “Please be patient with us.”

Even for those whose homes survive, the lifting of evacuation orders does not necessarily mean they can return to live in them right away, warned Michael Wara, a climate policy expert at Stanford University.

“There’s going to be smoke damage,” he said. “There’s going to be the fact that you don’t have utilities.”

In Pacific Palisades, the recovery process was underway in its incinerated downtown. The air buzzed with the sound of jackhammers, bulldozers and tree shredders. Workers cleared debris, pulled down charred utility poles and ground up the skeletal limbs of burned eucalyptus trees.

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Ali Sharifi managed to inspect his lower Palisades home on Tuesday. Aside from a burned backyard fence, it was intact. Yet the destruction around it, including charred schools, churches and grocery stores, gave him second thoughts about returning.

“Who wants to live in a ghost town?” Mr. Sharifi said.

Erica Fischer, an associate professor at Oregon State University who studied the aftermath of the Camp fire, said that a fast recovery is not always a good one, especially if it means rebuilding in ways that contributed to the disaster.

Of the ongoing evacuation orders in California, she said, “I know it’s not convenient, and it’s disruptive, but it keeps people out of harm’s way.”

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Joe Biden says ‘oligarchy’ emerging in US in final White House address

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Joe Biden says ‘oligarchy’ emerging in US in final White House address

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US President Joe Biden has warned that an “oligarchy is taking shape in America” that risks damaging democracy, as he blasted an emerging “tech industrial complex” for delivering a dangerous concentration of wealth and power in the country.

Biden’s comments during a farewell address to Americans from the Oval Office on Wednesday night amount to a veiled attack on Donald Trump’s closest allies in corporate America, including tech billionaire Elon Musk, just five days before he transfers power to the Republican.

Biden said he wanted to warn the country of the “dangerous concentration of power in the hands of a very few ultra-wealthy people” and the danger that their “abuse of power is left unchecked”.

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He cited late president Dwight Eisenhower’s warning in his 1961 farewell address of a military-industrial complex and said the interaction between government and technology risked being similarly pernicious.

“I’m equally concerned about the potential rise of a tech-industrial complex that could pose real dangers for our country as well. Americans are being buried under an avalanche of misinformation and disinformation, enabling the abuse of power. The free press is crumbling. Editors are disappearing. Social media is giving up on fact checking,” Biden said.

Biden’s words were a reference to the world’s richest man, Musk, the owner of social media platform X and the founder of electric-vehicle maker Tesla, who gave massive financial backing to Trump’s campaign and has become one of his closest allies during the transition to Trump’s new administration.

Some of Silicon Valley’s top executives, from Jeff Bezos of Amazon to Mark Zuckerberg of Meta, have also embraced Trump since his electoral victory and are expected to have prime spots at the inauguration ceremony in Washington on Monday.

Biden also used his remarks to cast a positive light on his one-term presidency, which ended with the big political failure of him dropping his re-election bid belatedly in late July, passing the torch of the campaign against Trump to vice-president Kamala Harris — an effort that ended in a bitter defeat.

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Biden’s approval ratings have hit new lows as he bows out from the presidency and a political career in Washington that has spanned more than five decades. Just 36.7 per cent of Americans approve of his performance on the job, and 55.8 per cent disapprove, according to the FiveThirtyEight polling average.

Biden said he hoped his accomplishments would be judged more favourably in the future.

“It will take time to feel the full impact of all we’ve done together, but the seeds are planted, and they’ll grow and they’ll bloom for decades to come,” he said.

Biden has not only faced seething criticism from Republicans, but also rebukes from Democrats who blame him for seeking re-election despite his advanced age. He is now 82.

Biden’s presidency was defined by a record-breaking jobs market and a robust recovery from the Covid-19 pandemic, as well as a series of legislative accomplishments on the economy. But the pain of high inflation became a massive political vulnerability for him.

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In foreign affairs, he took credit for western support for Ukraine after Russia’s full-scale invasion of the country in 2022, but his response to conflict in the Middle East, including staunch support for Israel’s war in Gaza, drew a strong backlash from progressive Democrats, undermining the unity of his political coalition.

It was not until Wednesday, with five days to go before he left office, that Biden — with help from Trump aides — was able to broker a ceasefire deal to free hostages held by Hamas. 

“This plan was developed and negotiated by my team and will be largely implemented by the incoming administration. That’s why I told my team to keep the incoming administration fully informed, because that’s how it should be, working together as Americans,” he said at the start of his address.

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Biden touts major wins in farewell address

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Biden touts major wins in farewell address
Biden touts major wins in farewell address – CBS Texas

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In his farewell address, President Biden warned an “oligarch” of “ultrarich” threatens America’s future.

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