Bailey on Rates

Bank of England (BoE) Governor Andrew Bailey said Tuesday that the latest policy statement from the bank does not necessarily imply that it will use negative interest rates, and market watchers should not read too much into it.

Last week, the BoE announced that it was looking at how to effectively apply the negative rates policy if needed at some point in the future, causing the pound to fall and the UK government bond prices to rise.

In a video conference hosted by the British Chambers of Commerce, Bailey said the previous statement implies nothing about the possibility of using the negative rate tool, adding that, nevertheless, negative rates must be among the bank’s ammunition.

“Technical work on negative rates takes some time. I won’t say anything more about negative rates now,” Bailey said.

Trump on Dollar

US President Donald Trump said he was rejected when he asked authorities to adjust the dollar’s exchange rate to counter China’s manipulation of yuan.
Addressing thousands of supporters at a political rally in Dayton, Ohio, on Monday, Trump said that after years of inaction against what he described as China’s aggressive moves in global markets, he saved jobs in many US states.

“I go to my guys, ‘What about doing a little movement on the dollar?'” Trump said, but they countered that was not possible. “‘Sir, we can’t do that. It has to float naturally.'”

Trump, who wants to be re-elected in the November 3 presidential election, repeated his claim that Beijing deliberately lowered the value of its currency in order to gain a competitive advantage in global markets.

Powell at Capitol Hill

US Federal Reserve Chairman Jerome Powell is attending on Tuesday the first of the three hearings in Congress this week, to hear the questions and concerns of representatives and senators about the emergency measures taken by the Fed to absorb the blow to the economy from the coronavirus outbreak.

Powell, who will appear before Congress along with Treasury Secretary Steven Mnuchin on Tuesday and Thursday, may be subject to reprimands from members of Congress that some of the programs designed to help small businesses so far have limited purchases, and other Fed actions fuel a stock market rally that exacerbates economic inequality.

The Congress session on Tuesday, which comes six weeks ahead of the presidential election, in which the epidemic and the government’s response to this is the main issue, is held at the Financial Services Committee of the House of Representatives chaired by the California Democrat Maxine Waters.

“We remain committed to using our tools to do what we can, for as long as it takes, to ensure that the recovery will be as strong as possible, and to limit lasting damage to the economy,” Powell will tell the panel, according to his earlier released prepared remarks.
The US economy has made “marked improvement” since the depths of the crisis, Powell is poised to say.
“Both employment and overall economic activity, however, remain well below their pre-pandemic levels, and the path ahead continues to be highly uncertain. The path forward will depend on keeping the virus under control, and on policy actions taken at all levels of government,” he will tell lawmakers.

US-UK Trade Negotiations

UK Trade Secretary Liz Truss announced on Tuesday that her country and the United States made their first tariff proposals in the fourth round of talks and agreed to allow a series of detailed market access talks.

“The exchange of tariff offers is a significant milestone and the speed at which this stage is reached demonstrates the momentum behind these negotiations,” said Truss.

The fifth round of talks of trade negotiations between the two allied countries will take place from mid-October to the end.


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