Seven days in the Square Mile

Bank of England governor Mark Carney indicated that interest rates, which were cut to 0.25%, could fall as low as 0.1% but ruled out negative rates. Forecasting that growth would fall from a predicted 2.3% next year to 0.8%, the Bank launched a £170bn stimulus programme. It will extend its QE programme to buy £60bn of Government debt and £10bn of corporate bonds, and create a £100bn “term funding scheme” for banks. The extent of the stimulus surprised markets, driving Government bond prices sharply higher, and the pound lower. Gilt yields (which move inversely to prices) entered negative territory. Demand was so high that the Bank’s buying programme ran into trouble on its second day because pension funds and insurance companies refused to sell enough gilts to meet its target. The FTSE 100 rallied, hitting a 14-month high this week. It is now up almost 10% this year. British Retail Consortium data defied predictions of a post-brexit shopping slump: online and high street sales rose at their fastest pace in six months in July, thanks to heavy discounting and warmer weather. Ofcom dropped its two-year investigation into Premier League TV rights auctions. RBS announced a worse than expected £2bn loss in the first half and said it would close more branches and cut jobs. Nissan warned that future investment in its Sunderland plant would hinge on the Brexit deal. One of Britain’s richest landlords, the Duke of Westminster, died.