That is all from the Business Live page for today. We'll be back from 6am tomorrow. Have a good night.
- Bank of England cuts interest rates to 0.25%
- FTSE closes up by 1.59% in London
- Pound struggles, losing 1.4% against the dollar
- Carney warns banks must pass on rate cut
- Bank announces two new stimulus schemes
- Bank expects no growth in second half of 2016
Wall Street shares showed very little change at close on Thursday, ahead of Friday's US payrolls report.
The Dow Jones industrial average was down 3 points, the S&P 500 up half a point, and the Nasdaq Composite up 6.5 points.
American cereal maker Kellogg's has seen its quarterly sales fall by 6.6%. The company blamed the recent volatility in Venezuela.
Demand for its breakfast foods and snacks dropped in both the US and Asia, although Pringles sales continued to grow.
Michael Hewson, chief market analyst at CMC markets tweets:
"Today's decision to cut the base interest rate is both disappointing and ill-advised. The post-Brexit economic problems are down to consumer and business uncertainty and will not be solved by introducing monetary stimulus. By lowering interest rates, the Bank of England will distort the economy and potentially reduce growth.
"The Bank of England has done the right thing in cutting rates and starting a large quantitative easing programme. The short-term risks of Brexit must not be compounded by tight money, and with inflation rates already near zero there is little risk of excess inflation.
Mark Urban, diplomatic editor at Newsnight, draws our attention to an exclusive by German newspaper Handelsblatt.
FT reporter notes a potential lack of detail in today's stimulus plan.
The World at One
BBC Radio 4
An interesting story from earlier in the day, looking at the thorny issue of why UK productivity is found wanting compared to other developed nations.
It seems issues of investment and skills are the key to improving UK productivity levels says the Federation of Small Businesses.National policy director Martin McTague spoke to James Robbins on the World at One soon after Theresa May hosted a meeting of small and medium sized companies in Downing Street at the same time that UK interest rates were being cut.
Nationwide Building Society tweets:
More on the Facebook clickbait war.
The social network says it is updating its news feed algorithm to detect so-called "clickbait" headlines, by blacklisting the following:
- If the headline withholds information required to understand what the content of the article is
- If the headline exaggerates the article to create misleading expectations for the reader.
- “You’ll Never Believe Who Tripped and Fell on the Red Carpet…” withholds information required to understand the article (What happened? Who Tripped?)
- The headline “Apples Are Actually Bad For You?!” misleads the reader (apples are only bad for you if you eat too many every day).
US business reporter
Ratings agency Fitch called the Bank of England's decision to cut rates "a proactive policy response to the EU referendum".
But it warned that the move was just a "cushion" that would not fully offset the economic impact of the UK's decision to leave the European Union.
"The referendum will take a significant toll on the economy despite sterling's fall potentially supporting exports," the agency wrote in a report.
Our personal finance correspondent tweets:
The UK interest rate cut has left Wall Street stocks decidedly unshaken.
US shares are barely changed in early afternoon trade in New York.
The Dow (see chart above) is up 3 points, the S&P 2 points, and Nasdaq 9 points.
The widely expected interest rate cut by the Bank of England is unlikely to stimulate a flurry of retail spending. The impact on consumer confidence or spending could even be detrimental in the short term. With the immediate impact of the interest rate cut being a drop in the value of the pound this move is hardly likely to boost flagging consumer confidence, which is a major factor in driving spend. In addition, consumers will see returns on savings fall yet further. In theory, this is supposed to stimulate spend by making it less desirable to save, but there seems little evidence this has worked up to now.
Referring to the rate cut, former business secretary Sir Vince Cable says: "Leaning too heavily on monetary policy is taking away from what the government should be doing in terms of the total budget, which is where the heavy lifting should be done."
Ford has recalled 830,000 cars in North America due to potentially faulty door latches.
In certain situations, the company says "the door may unlatch while driving". It adds that it has identified "one reported accident and one reported injury" related to the issue.
The models in question are:
- 2013-15 C-MAX
- 2013-15 Escape
- 2012-15 Focus
- 2015 Lincoln MKC
- 2015 Mustang
- 2014-16 Transit Connect
Brexiteer and respected economist Andrew Lilico says the Bank of England's rate cut may turn out to be premature and unnecessary. He writes:
"The Bank thinks Brexit will mean 2.5% less GDP growth over the next three years, though probably no recession, and that what happens later depends crucially on our subsequent international trading relationships. I said in advance of the referendum a Brexit vote would probably mean 2-3% lower GDP growth in the period around exit, caught up later. So no surprise in the Bank’s numbers, there".
The FTSE had a strong day as the Bank of England announced it's first interest rate cut since 2009.
The FTSE 100 closed up 101.89 points at 6736.29.
However, the pound was 1.4% down against the dollar at $1.31.
The biggest gainer of the day was insurance company Aviva - up nearly 7% to 411.30p per share.
News at pharmaceuticals company Hikma was not as good, with shares finishing down 17% at 2216.00p.
The Chancellor of the Exchequer Philip Hammond has welcomed the Bank of England's actions in cutting interest rates to 0.25%, and in expanding its quantitative easing programme.
Mr Hammond told the BBC the measures were intended to support the economy during "this period of uncertainty, as we negotiate our exit from the European Union".
He added: "We will now look very carefully at the data that's published over the summer and the OBR report in the autumn, to see what's actually happening in the real economy, in response to what was a very large package that the governor has announced."
He added: "As we approach the autumn statement we'll consider whether there's any need for a fiscal response."
The BoE have certainly lived up to their billing as the day’s main event, with all other considerations largely cast aside in the wake of the boldest package of stimulus we have seen since 2009. For once, the man so often dubbed the unreliable boyfriend has turned up with a bunch of flowers and a box of chocolates.
David Blanchflower doesn't hold back in attacking those who disagreed with buying government bonds as part of the MPC's latest round of stimulus.
While the vote to reduce the UK's interest rate was unanimous, things were a little less clear when it came to the rest of the stimulus package announced by the Bank of England.
Eight of the nine members supported the introduction of a corporate bond scheme, and only six members supported further purchases of UK government bonds.
Daniel Hegarty, the founder of digital mortgage broker Habito says despite the rate cut, many borrowers will need to do some work to reap the benefits.
"The real problem is that people are afraid of their finances. Almost 5 million Brits don’t know how much their mortgage is costing them and a quarter of all mortgage holders would refuse to switch their mortgage regardless of the potential savings on offer. This aversion to switching mortgages is costing consumers collectively an estimated £29 billion per year – the result of a fractured industry, stuck with 30-year old processes, so difficult to navigate that customers have given up trying. Whilst we’re in for a bumpy few years as the market finds its feet again, it’s time to stop burying our heads in the sand and take control of our personal finances – especially the biggest financial commitment most of us will ever make."
BBC's Victoria Fritz tweets about the problems posed by plummeting UK gilt yields
Former pensions minister Ros Altmann says: "Today's decision by the Bank of England to cut short-term interest rates and expand the QE programme is another blow for UK pensions.
"Both defined benefit and defined contribution pensions have become more expensive as rates keep falling."
She said that the Bank's announcement"completely ignores [the] pension impacts of its policies".
Elsewhere in business news, Goldman Sachs warns that the Brexit vote may adversely affect some of its operations in the EU and could require the bank to restructure some of its businesses.
Brexit is also likely to change arrangements by which firms in the United Kingdom are able to provide services in the EU, which may adversely affect the way the bank conducts certain operations, the bank said in regulatory filing.
Goldman, which did not break down its exposure to the EU or the UK, said the timing and outcome of Brexit negotiations were highly uncertain.
Let it never be said we don't bring you the best in public service journalism. Here is an action shot of the governor of the Bank of England, inspired by a metaphor from our economics editor, Kamal Ahmed.
Lower interest rates may give a helpful boost to market confidence, but have little long-term effect on businesses when rates are already so low. What businesses want is low, stable interest rates for the foreseeable future, which will enable them to make their own growth and expansion plans with confidence. The additional measures – expanding QE, purchasing corporate bonds and the new term funding scheme – go beyond what many expected, but will be welcomed by business. The term-funding scheme in particular will help to ensure that businesses benefit from cheaper loans so they can invest and grow.
Economics editor Kamal Ahmed tweets:
BBC personal finance correspondent tweets:
Existing NatWest customers with fixed rate products will not see a change in their rate during their fixed rate period. We are currently reviewing whether we will make any changes to variable rate products and will provide an update in the near future. For those customers on Base Rate Linked products, we will reduce their rate by 0.25%.
Commenting on the decision of the Bank of England to cut interest rates to a record low, the Liberal Democrats say:
“This is a necessary move by the Bank of England to help our economy as it reels from the impact of Brexit, but we cannot pretend this isn’t a deeply worrying sign. “The Bank has now used the only major tool left in its shed. Over the coming years we are at risk of having to go into negative territory. We are at the whims of what happens next. It is crucial that we do not lock ourselves in to a race to the bottom, with interest rate cuts, devalued Sterling, tax rates that would be better suited to a tax haven and hiring freezes across business - all to offset the costs that will fall on all of us if Brexit negotiations fails to secure access to the single market. An economy based on these measures is not sustainable.”