Fed chair Warsh: inflation expectations and risks have come down
Kevin Warsh also said that inflation expectations and inflation risks have come down in recent weeks, as he reiterated the Fed’s commitment to bringing inflation down to its 2% goal.
He said at the panel debate in Sintra:
Expectations of inflation over the first four months, first four weeks of this period, they’ve come down; inflation risks have come down.
If there were people in households or the business sector, in the financial markets, who thought that this central bank was going to be comfortable with an inflation objective above 2% – well, I guess they’d be disappointed: We’re going to deliver price stability in the US.
Key events
Earlier, Fed chair Kevin Warsh said central bankers will decide whether to raise interest rates when they “shut the door” and begin their next meeting, speaking at the international central banking panel in Sintra, Portugal, where he told questioners they would “fail” to break his rule against forward guidance.
We get into that room and shut the door, we’re going to have a good debate, but I don’t have much more for you than that.
I am not going to give forward guidance.
It is his first public appearance outside the Fed’s policy meeting, as he discusses his approach on a stage with ECB president Christine Lagarde, Bank of England governor Andrew Bailey, and Bank of Canada governor Tiff Macklem.
Also on the panel, Bank of England governor Andrew Bailey talked about the increases in government bond yields and high stock market moves in recent months, the latter riding high on the artificial intelligence (AI) boom.
More recently, there has been a sell-off of technology stocks because investors worry about the levels of debt being taken on to fund AI infrastructure.
We do look at asset valuations because… you’ve seen this obviously over recent months where you’ve got quite a divergence between how bond yields are moving and how equity markets are moving. Now I think a lot of this comes back to what Kevin [Warsh] was saying about AI, it’s explicable in broad economic terms. But the question is that going to lead to some wider stability issues?
You can watch the debate here.
ECB president Lagarde: Eurozone inflation risks more balanced due to oil price drop
Risks to euro zone inflation and economic growth are now more broadly balanced than they were a few weeks ago, given the recent fall in oil prices, European Central Bank President Christine Lagarde said today, speaking at a central bank forum in Sintra in Portugal.
Last month, when it raised interest rates by a quarter point to 2.25%, the ECB said that risks to growth were skewed to the downside, while in case of inflation, they were skewed to the upside.
US Federal Reserve chair Kevin Warsh is speaking on the on the same panel. Asked about the central bank’s ability to stand up to Donald Trump (who wants interest rate cuts), he defended the Fed’s independence.
We’ve been an independent central bank for a very long time. We’re going to be an independent central bank, at this moment. And you’re going to see no changes on that.
Trump picked Warsh to succeed Jonathan Powell, who remains a member of the Fed’s board of governors. The new chair took office in late May.
Minister and MP ‘furious’ over cuts to road projects to fund defence plan
The Labour minister Hamish Falconer and the Reform MP Robert Jenrick have voiced anger at the cancellation or delay of key transport infrastructure projects to fund the defence investment plan.
Falconer, the MP for Lincoln and Middle East minister, and Jenrick, the MP for Newark, were among those who have had cuts to road improvements in their constituencies, with savings contributing towards the increase in defence spending. Two roads in the East Midlands are among those where investment cuts have been made to fund a £15bn uplift in defence.
The mayor of the East Midlands, Claire Ward, said she had been unaware of the forthcoming cuts until Keir Starmer made his defence investment plan (Dip) speech on Wednesday.
Overall defence spending will rise from 2.6% of GDP in 2027 to 2.7%, or nearly £80bn, by 2030. Starmer said that would put the UK “on a trajectory” to hit 3% in the next parliament, although it remains well below a Nato target of 3.5% by 2035.
Transport and energy are among the areas where ministers have accepted cuts to their departments’ capital budgets to fund the increase in defence spending. In an unusually angry statement for a sitting minister, Falconer said:
I am disappointed by the uncertainty today about the A46 Newark bypass-widening scheme. I support further funding for the Dip, but the A46 upgrade programme is well advanced, long awaited, excellent value for money and of strategic importance to both Lincoln and the region.
Up to 150 former WH Smith stores to close as high court approves restructure
Up to 150 former WH Smith high street stores are to close after the high court approved a swingeing restructure that could affect thousands of jobs.
The retailer, which has 450 stores and employs about 5,000 staff, was bought last year by the private equity firm Modella Capital, which also owns Hobbycraft, and rebranded as TG Jones.
It had warned it could have to call in administrators if the restructuring plan, which involves writing off debts to suppliers and cutting rent for many landlords, was not approved.
On Wednesday Alex Willson, the chief executive of TG Jones, said: “We welcome the court’s approval of our restructuring plan. This decision allows us to move ahead with our turnaround strategy.
The plan protects the substantial core of the store estate and makes TG Jones a stronger, more sustainable business. We are incredibly grateful to all the colleagues, partners and stakeholders who engaged constructively throughout the process, and to Modella Capital for its continued financial commitment.
The high court judge Mr Justice Hildyard approved the restructure, despite criticising the short amount of time given for the court to consider the matter.
Halifax to disappear from UK high street as Lloyds axes bank brand after 173 years
Lloyds Banking Group has announced it is axing the Halifax brand, meaning the 173-year-old former building society’s name will disappear from UK high streets.
The group will stop opening new accounts under the Halifax brand, and kickstart a process of shifting existing accounts to Lloyds branding over the coming days.
The bank will begin removing Halifax signs from 190 of the group’s 531 branches in early 2027. No branches will be closed as a result of the changeover.
The decision, first reported in May, has proved controversial among loyal customers and Halifax residents, and follows a review of Lloyds’ branding strategy.
The group has operated under three brands – Lloyds, Halifax and Bank of Scotland – since January 2009, when the financial crisis and a series of bad business decisions brought the combined Halifax-Bank of Scotland group to its knees.
Oil prices fall 1% as US-Iran talks continue
Oil prices have fallen, as negotiations for a final peace agreement between the US and Iran continued at a technical level.
Brent crude fell 1.6% to as low as $71.62 a barrel, and is now trading at $72.25, down nearly 1%, close to levels seen before the war started.
Technical talks betweeen the two sides are under way in Doha, with Qatar and Pakistan acting as mediators, Reuters reported, citing a soure.
Donald Trump and his son-in-law Jared Kushner and envoy Steve Witkoff arrived in Doha for what the White House described as “high level” talks on Tuesday. But Tehran and host Qatar said they would meet with mediators, rather than directly with the Iranian representatives.
Brent crude fell by around $45 a barrel between April and June, its biggest quarterly loss since the global financial crisis in 2008, amid relief over a ceasefire and the negotiations for a permanent deal to end the four-month war, started by US-Israeli missile attacks on Tehran on 28 February.
UK competition watchdog launches investigation into Nexfibre-Netomnia deal
Mark Sweney
The competition watchdog has launched an in-depth investigation into the £2bn proposed deal by the owners of Virgin Media O2 to buy the UK’s fourth largest broadband operator.
The Competition and Markets Authority (CMA) said today that it has accepted a request from Nexfibre – which is owned by VMO2 shareholders Liberty Global and Telefonica as well as InfraVia Capital – to fast-track its investigation into the deal to buy Netomnia.
The Nexfibre joint venture aims to build scale by buying so-called “alt-nets”, smaller challengers competing in the market to provide broadband services, to create a challenger to BT’s Openreach. Rajiv Datta, chief executive of Nexfibre, said:
We requested a fast-track to phase 2 to get to the right answer faster, ensuring due process, while recognising urgency,” said “This deal would create the scale, sustainable alternative to the BT Openreach monopoly, something the UK market still lacks.
The deal to buy Substantial, the parent company of Netomnia, would create a business with an 8m fibre network.
The CMA investigation is being closely watched by the industry as consolidation comes to the around 100 alt-net companies which have run up more than £9bn in net debt, having raised more than £31bn in funding, according to Enders Analysis.
Goldman Sachs-backed CityFibre, the largest of the UK’s alt-nets, has publicly called for the deal to be blocked arguing that a high degree of overlap between VMO2’s broadband network and Netomnia would materially reduce competition.
Simon Holden, chief executive of CityFibre, said:
VMO2/Nexfibre’s planned acquisition of Netomnia would remove a successful challenger and reduce choice for consumers,” said . “The deal raises significant questions and the CMA is right to take an in-depth look at its impact on UK digital infrastructure and the competition that policymakers, regulators and the altnets are working so hard to establish.
The CMA said that its in-depth investigation will conclude in December. A spokesperson said:
We have accepted nexfibre and Substantial’s request to fast-track their merger to an in-depth phase 2 inquiry. This decision is not a finding of any competition issues, and it allows the independent inquiry group leading this investigation to make a decision faster than under the usual timetable.
Mark Sweney
Paramount has formally submitted commitments to European regulators to win clearance of its $110bn takeover of Warner Bros Discovery (WBD).
The European Commission revealed the move in an update to the competition case examining the mega-deal on its website on Wednesday. No details were provided about what remedies Paramount has submitted to allay regulatory fears.
The offer by Paramount is reportedly expected to win approval in Europe paving the way for the creation of one of the world’s largest media and entertainment groups. The deal gained approval from the US Department of Justice earlier this month.
The deal will create a media powerhouse controlling assets including the Paramount and HBO Max streaming services, Channel 5 and TNT Sports, which broadcasts Champions League, Premier League and the Olympics, the Hollywood studios behind franchises including Superman, Batman and Top Gun, as well as HBO, home to shows including Game of Thrones, The White Lotus and Succession.
However, on Tuesday the UK culture secretary said she intends to ask Britain’s media and competition watchdogs to investigate public interest and competition concerns relating to the deal.
Lisa Nandy said that she is “minded” to task the communications regulator Ofcom and the Competition and Markets Authority (CMA) to investigate the deal on media plurality and competition grounds.
Topps Tiles warns of lower profits after hit from heatwave
Topps Tiles warned its annual profit could drop by 29%, triggering a 10% slump in its share price, as customers shifted to cheaper products and the heatwave forced builders to down tools.
Britain’s biggest tiles specialist, which has about 300 stores, has been cutting costs and closing underperforming shops, as stretched household budgets and a subdued housing market hold back demand.
Topps Tiles said that extreme heat led to temporary stoppages among housebuilders and tradespeople, and while it expects a catch-up, this is unlikely to come back fully before the end of its financial year in September.
Alex Jensen, the chief executive, said:
Topps continues to outperform the wider market despite weaker consumer sentiment and an increased focus on lower priced products. We’re making significant strategic progress across our priorities and the self-help actions we are taking to support profitability are working and will position the business for long-term sustainable growth.
The tile company expects adjusted pretax profit to come in above £6.5m, down from £9.2m last year, as margins come under pressure.
We have seen some margin pressure as ongoing uncertainty in the macroeconomic environment has led to a current greater demand for lower priced products… The macro-economic environment has continued to be challenging, with lower consumer spend and commercial areas such as housebuilding coming under further pressure.
Shares in Topps Tiles were among the biggest fallers in London and were 7.5% lower at 33p in early trading.
The gloomy update also weighed on rivals, including kitchen supplier Howden Joinery and building materials supplier Travis Perkins, which fell 1.5% and 2%, respectively.
Analysts at Peel Hunt said:
While weather is arguably a one-off hit, the weaker consumer sentiment and increased participation of lower priced product is unlikely to change in the short term and so we have reduced our sales and margin assumptions for the outer years as well.
Primark owner ABF expects lower profit because of sugar business
Primark owner Associated British Foods still expects annual profits to come in below last year’s, with its sugar business making losses and trading worsening, and Primark also struggling.
ABF shares fell 2.3% and were among the biggest fallers on the FTSE 100 index, which dipped just under 30 points, or 0.26%.
The group, which unveiled plans in April to spin off the budget clothing chain from its food businesses before the end of 2026, said group revenue on a constant currency basis was flat in its third quarter.
Primark’s revenue increased 3%, but like-for-like sales (at outlets open more than a year) were down 2.2%, reflecting a “challenging” retail environment in most markets.
The company said a strong start to its spring-summer trading in March was followed by weaker trading in April and May, largely due to the impact of the Middle East war on consumer sentiment and unseasonal weather. Improved weather in June, i.e. the heatwave, contributed to stronger trading.
Sales in ABF’s grocery business, which includes well-known brands such as Ovaltine, Ryvita and Twinings, rose 1%. Revenue in the sugar business dropped 4%, reflecting lower average selling prices in Europe, volume declines in Tanzania and the impact of higher imports in South Africa.
ABF said the duration and severity of the Middle East war has increased gas price expectations for next year, which has impacted its European profit outlook for its sugar business.
It now expects an adjusted operating loss for sugar of £25m to £60m in the current financial year and “a further deterioration” in 2026-27. Aside from sugar, its full-year outlook remains unchanged, with group profits seen below the £1.73bn made last year.
The company saide turning around the sugar business is a priority for management, signalling further cost cuts.
We expect to take further action to lower our cost base going forward, particularly in Europe.
Eurozone inflation slows more than expected to 2.8% in June
Inflation in the eurozone slowed more than exected last month, easing pressure on the European Central Bank to raise interest rates again this month.
Overall inflation in the 21 nations sharing the euro currency slowed to 2.8% in June from 3.2% in May, below analysts’ forecasts of a 3% reading, as prices for food, energy and services all rose at a slower pace.
Core inflation, which strips out volatile food and fuel prices, slowed to 2.4% from 2.6%, as services inflation dropped to 3.2% from 3.5%.
Although the June figure is still well above the ECB’s 2% inflation target, the recent decline in oil prices triggered by US-Iran peace negotiations and ceasefire has raised hopes that price pressures willl ease.
Several policymakers have said that there is no rush for the bank to follow up June’s quarter-point rate hike with another move this month. However, Joachim Nagel, president of the Bundesbank and an ECB policymaker, said today that inflation is still too high, according to Germany’s Frankfurter Allgemeine Zeitung.
The ECB is worried that the initial energy shock will feed through into prices for other goods and services, eventually lifting wages as well. But such second-round price effects have yet to materialise and so far wage growth has not picked up.
Most economists and investors think that the ECB will raise rates again in September or October, if it pauses in July.
There are worries that the shortage of fertiliser from the Middle East coupled with the European heatwave could reduce crop yields and push up food prices in the months ahead, lifting inflation just as energy costs are easing.
