The Notebook: Victoria Scholar on Muskisms, Barbie and why there’s light at the end of the rate-rising tunnel
Where the City’s movers and shakers get a few things off their chest. Today, it’s Victoria Scholar of Interactive Investor
Little relief from interest rates yet, but there is light at the end of the tunnel
The Bank of England is forecast to raise interest rates for the 14th time in a row today, lifting the bank rate to fresh 15-year highs.
While expectations are for the central bank to lift the current bank rate from five per cent to 5.25 per cent, there is still a significant chance it could opt for a more aggressive 50 basis point move to 5.5 per cent. Even a 25-basis point increase would lift borrowing rates to the highest level since March 2008 but would mark a slowdown from June’s half a percentage point hike.
The Monetary Policy Committee’s decision is unlikely to be unanimous, with policymakers divided over the extent to which the BoE needs to tighten monetary policy further to rein in inflation.
New external MPC member Megan Greene, who will cast her first vote this week, is seen as a more hawkish addition to the committee than her predecessor Silvana Tenreyro, who voted against recent rate increases.
Greene has warned against “start-stop monetary policy”, which she says could mean ending up having to tighten rates even more. Meanwhile, dovish member Swati Dhingra, who has been voting to keep rates on hold since December, is likely to do the same again today.
Forecasts for the peak of the interest rate cycle have retreated below six per cent recently, and some of Britain’s biggest lenders have been cutting their fixed mortgage deals.
These developments come after the UK’s headline inflation rate dropped by more than expected in June to 7.9 per cent, pointing to cooling domestic price pressures. Core inflation, which strips out some of the more volatile components, also eased to 6.9 per cent from 7.1 per cent in May.
Although inflation is finally starting to come down, UK CPI is still sharply above the central bank’s two per cent target. And there are concerns about second round inflationary effects from the labour market and a wage-price spiral after British wages rose at their fastest pace on record.
Monetary policy is a blunt tool that is notoriously bad at tinkering at the edges. Although more rate hikes may be needed, there is light at the end of the tunnel with the UK heading towards the peak of the tightening cycle, which could support risk-on sentiment and in turn
UK equities.
Barbie saves the big screen
‘Barbenheimer’ has provided a much-needed boost to struggling cinemas. In combination, Barbie and Oppenheimer have achieved more than $1.1bn in global ticket sales since 21 July.
It is expected that the Barbie movie alone could gross more than $1bn around the world once its stint at movie theatres completes. Pandemic lockdowns and the rise of streaming services like Netflix have weighed heavily on global cinema trips in recent years. However, this summer’s hype around Barbenheimer has convinced many movie fans to head back to their
local cinemas.
Among the tech bros…
This week, Uber reported its first ever operating profit and record trip numbers during the second quarter. Net income in the period hit $394m (£310m), outshining analysts’ expectations for a loss of $49.2m. This comes as a welcome development for Uber, which has amassed losses of $31.5bn since 2014. Shares have surged more than 100 per cent over the past 12 months thanks to a broader rebound in technology after last year’s ‘tech wreck’. However, shares fell yesterday after it warned about rival Lyft’s effective pricing.
Elon Musk will face a financial penalty from San Francisco authorities after putting up a flashing X sign on its X, formerly Twitter, headquarters building. Last week, Musk changed the microblogging site’s name as part of a company rebrand as it looks to reposition itself away from the globally recognised blue bird logo. Musk says he’s planning to create an ‘everything app’ with the company shifting beyond just 140-character messages, that bore similarities to birds tweeting to one another.
The High Performance podcast
The High Performance podcast aims to provide “an intimate glimpse into the lives of high-achieving successful individuals”. This episode with journalist and broadcaster Emily Maitlis delves into her experience before, during and after her captivating interview with Prince Andrew over his ties to the disgraced financier Jeffrey Epstein. Maitlis talks about the intense level of preparation she put into the discussion and why that contributed to the interview’s triumph, providing wider lessons about the importance of being ultra prepared to achieve success.
She talks about the highs and lows of her time working on BBC Newsnight as well as her departure from the British broadcasting institution.
Maitlis also discusses the challenges of juggling a dynamic career with motherhood and why running is an important part of her life.