\nBailey also cautions that interest rates are unlikely to fall back to the record low (just 0.1%) we saw in the Covid-19 pandemic, before the inflation shock of the Ukraine war.<\/p>\n
He told KentOnline:<\/p>\n
\n\u201cMy answer is I would not expect that because what caused interest rates to go that way it was, amongst other things, two very big shocks to the economy.<\/p>\n<\/blockquote>\n
The financial markets predict UK interest rates could fall to 4.5% by the end of this year, and to 3.5% or lower by the end of 2025.<\/p>\nShareUpdated at\u00a007.45 BST<\/time><\/p>\n<\/footer>\n<\/article>\n\n\nChina’s shares surge after stimulus measures announced<\/h2>\n<\/header>\n Investors across Asia-Pacific markets have welcomed China\u2019s stimulus measures.<\/strong><\/p>\nStocks have surged in Shanghia and Shenzen, driving the CSI300 index up by 3.7% today.<\/p>\n
China\u2019s authorities have \u201cset a fire\u201d underneath the country\u2019s equity markets, says Kyle<\/strong> Rodda<\/strong>, senior financial market analyst at Capital.com<\/strong>.<\/p>\n\nHowever, for investors fearful about systemic instability, scarce liquidity and asset price deflation, the policies announced today provide reason for greater optimism about Chinese markets.<\/p>\n
While cuts to reverse repo rates and reserve requirements will grease liquidity, the most remarkable move is allowing brokers and funds to tap the PBOC for cash to buy stock<\/p>\n<\/blockquote>\nShare\n\nPound hits two and a half-year high<\/h2>\n<\/header>\n The pound has hit its highest level in over two years this morning, as investors bet that the Bank of England will cut interest rates slower than the US Federal Reserve.<\/strong><\/p>\nSterling has extended its recent rally this morning, hitting $1.3366 for the first time since March 2022.<\/p>\n
The pound is strengthening after the Bank of England left interest rates on hold last week, and said borrowing costs must not fall \u201ctoo fast or by too much\u201d.<\/p>\nThat caution contrasts with the Fed, which slashed US rates by half a percentage point last Wednesday.<\/p>\n
The markets now expect the Fed to cut rates by another three-quarters of a percent by the end of this year. The Bank of England is only expected to cut by up to half a percent.<\/p>\n
The pound has also hit its highest level against the euro in over two years, rising over \u20ac1.20. That followed economic data which suggested Germany was sliding into recession, as its manufacturing sector continued to contract.<\/p>\n<\/figure>\nShare\n\nIntroduction: China launches stimulus measures to revive economy<\/h2>\n<\/header>\n Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.<\/strong><\/p>\nChina\u2019s central bank has launched a blitz of stimulus measures to support its economy, as policymakers strive to hit Beijing\u2019s growth targets.<\/p>\n
Faced with a spluttering economy. the People\u2019s Bank of China has pulled out its bazooka.<\/p>\n
First, it is cutting the amount of cash banks must hold on their books (known as the reserve requirements ratio) by half a percentage point (50 basis points). That should free up more money to be lent to customers.<\/p>\n
Second, it is lowering several key interest rates. The seven-day repo rate, PBoC\u2019s new benchmark, by 0.2 percentage points to 1.5%. The interest rate on the medium-term lending facility will drop by about 30 basis points, and loan prime rates by 20-25 bps.<\/p>\n
Third, there\u2019s more support for the property market. PBoC says it will encourage commercial banks to lower existing mortgage interest rates, which will cut costs for both current and new borrowers.<\/p>\n
It is also lowering the down-payment requirements for both first and second homes \u2013 to help people get onto the property ladder, and keep sales moving.<\/p>\nPeople’s Bank of China (PBOC) Governor Pan Gongsheng at a press conference in Beijing, China, today<\/span> Photograph: Tingshu Wang\/Reuters<\/figcaption><\/figure>\nFourthly, PBoC governor Pan<\/strong> Gongsheng<\/strong> announced the central bank will create new monetary policy tools to support the sstable development of the stock market.<\/p>\nAll in all \u2013 a wide-ranging push, which has pushed shares higher on the Chinese stock exchange.<\/p>\n<\/figure>\nThe package follows signs that China\u2019s economy has been faltering in 2024. Growth slowed to 4.7% year-on-year in the second quarter of the year, down from 5.3% in Q1 \u2013 putting Beijing\u2019s 5% growth target at risk.<\/p>\n
In July, China\u2019s export growth missed forecasts<\/a>, and in August manufacturing activity sank <\/a>to a six-month low.<\/p>\nEconomists are sceptical, though, that PBoC\u2019s measures alone will be enough.<\/p>\n
Capital Economics<\/strong> analyst Julian Evans-Pritchard<\/strong> says:<\/p>\n\nBut on its own, it may not be enough.\u201d<\/p>\n<\/blockquote>\n
The agenda<\/h2>\n\n\n9am BST: IFO survey of German business confidence<\/p>\n<\/li>\n
\n2pm BST: Case-Shiller index of US house prices for July<\/p>\n<\/li>\n
\n3pm BST: US consumer confidence report for August<\/p>\n<\/li>\n<\/ul>\nShareUpdated at\u00a007.21 BST<\/time><\/p>\n<\/footer>\n<\/article>\n