Were ultra-low interest rates a good idea? They were introduced post-financial crash to soften the edges around credit and consumer borrowing but the Bank of England is clearly becoming uneasy. This morning it warned on both car finance and credit card debt.
“Consumer credit has increased rapidly," said the Bank of England in a statement. "Lending conditions in the mortgage market are becoming easier. Lenders may be placing undue weight on the recent performance of loans in benign conditions.” These words sound very much like an interest rate warning.
The Bank’s words had some positive effect on sterling, climbing 0.42% to $1.2774 while the euro pushed higher against the dollar, up +0.92% to $1.281. Earlier in the day the euro hit $1.1305 – its highest level for nine months and a fresh 2017 high – as the dollar fell back (more of below).
The FTSE 100 ended 12 points lower at 7,434.36 with oil and miners climbing strongly. The biggest faller was engineering player GKN, down -4.39% at 346.10p.
- UK FTSE 100 7,434.36 -0.17%
- Dow 21,435.63 +0.12%
- S&P 500 2,439.90 +0.03%
- Nasdaq 6,232.55 -0.23%
- Nikkei 225 20,225.09 +0.36%
- DAX 12,698.35 -0.57%
- CAC 40 5,264.32 -0.59%
- Gold 1,248.90 +0.20%
- Oil WTI 44.34 +2.21%
IMF scorns Trump growth boasts
Both sterling and the euro climbed today as the dollar fell. The dollar was part-responding to the IMF slashing its growth forecast on the US economy from 2.3% to 2.1% this year and next. Originally the IMF predicted a 2.5% growth rate for 2018.
Much of the Trump growth premise was originally based on tax cuts. However the IMF says much of the detail of President Trump’s economic plans remain unclear; the IMF described the Republican's underlying growth targets as “extremely optimistic”.
Meanwhile there seems to be a widening disconnect between still-high US stock prices and substantial manufacturing and assorted workplace headwinds, not to mention significant US debt levels.
Body Shop to be sold for £880m
L’Oreal has confirmed it has signed a deal with Natura to offload the Body Shop. The Brazilian cosmetics giant is paying an estimated £880m for the brand, owned by L’Oreal.
“The proposed sale,” said L’Oreal in a statement, “is subject to clearance by anti-trust authorities notably in Brazil and in the United States, and expected to close during 2017.”
Meanwhile many firms are reporting a cyber attack hit including the UK’s ad agency WPP. Several large companies across Europe appear to have been hit, including Danish shipping operator AP Moller-Maersk and oil and mining companies Evraz and Rosneft.
Breaking news: Brexit secretary David Davis describes the UK's exit from the EU 'as complex as a moon landing'.