Please see today’s daily update from EPIC Investment Partners below:
Swati Dhingra, the most dovish member of the Old Lady’s Monetary Policy Committee (MPC) has warned that the central bank may be “underplaying the downside risks” in the economy, highlighting the declining headline inflation and continued weak consumer spending. In an interview in the FT, Dhingra, who voted for a 25bp reduction in the bank rate last week, the only member to do so, believes there is little danger of a resurgence in inflation, given weak household demand.
She stated that she was “not fully convinced there’s some kind of really sharp excess demand in the economy coming from the consumption side”. She is “More concerned that we might be underplaying the downside risks”. With pandemic savings drying up and the jobs market loosening, she thinks the “buffers” in the economy will also fade.
“You might see the real economy start to get negatively hit in a more profound way and I don’t see why we should be risking that”, Dhingra said, adding that given weak consumption it was hard “to imagine how that will get reversed so sharply that you will see a resurgence of inflation driven by demand pressure”.
Dhingra’s interview comes after Huw Pill, the bank’s Chief Economist said that the drop in interest rates is now not a question of “if, but when” with rates dropping as a “reward” for the economy. The remark, in a webcast Q&A, cemented the view that the outlook for the BoE for monetary policy has shifted. Pill said that although it was premature to talk about rate cuts, underlaying domestic inflationary pressures had started to wane, meaning that “as that process works through, we can begin to reduce the bank rate”.
Also, in a study published in the Proceedings of the National Academy of Sciences, scientists said that hurricanes are now getting so powerful due to climate change that the upper limit of the Saffir-Simpson Hurricane Wind scale, which, as most of us know is Category 5, needs another level. They propose adding a Category 6 label to any hurricane with sustained winds of “at least” 192 mph.
The scientists found that of the five storms that would have been in the hypothetical Category 6, they’ve all occurred since the year Tom Hanks’ Captain Phillips was released.
Please check our blog content for advice, planning issues and the latest investment, market and economic updates from leading investment houses.