saunders to the mpc, relatively new compared to the rest of the mpc. talk about three voting members running their hand up for an interest rate hike, when the politics have become even murkier. those hawks as well, they are independent members, which is another fact you have to think about, as well. that is a factor, too. the governor of the bank of england will be speaking this evening, across the road from his usual venue and of course we have the chancellor coming through. there is extreme clinical uncertainty in the u.k. right now, we are uncertain of a brexit. we don't have a clear course on a number of different areas, and of course this is where these people say it is time to raise rates. more fromng economists in london saying the next move is down, not up. jonathan: also the prospect of more qe. may push higher, not by a significant amount, up about .1% on the day, but you see the sharp move on the charts. woodt want to turn to rob and bring him into the conversation, for me and many others, it wasn't about the bank of england decision, it was

the last time three members of the mpc reviews, there was things like oil prices and wea kness was thingsprices and weakness in sterling so lots of people query this. also the incidents from the fire, to the london attack, to the manchester at tack, to the slowdown during election periods, i am getting these from clients and people in the street, general confidence has been knocked and investors coming into the uk. a real concern that all of these are adding up to create a cocktail which is reminiscent of the slowdown in 2007 which was more of a crash. i think the real issue is when you add all these incidents together create a crisis of confidence which will lead to a much tougher slowdown at the end of 2000 710. no time to talk about greece but we have heard plenty during the day. thank you very much and good to see. have a good day, that is it from hello there. it looks predominantly dry for the uk for the next three or four days. temperatures will rise as well. but actually through the course of yesterday, we lost temporarily some of the heat. things freshened up behind our cold weath

many members of the mpc have never entered in there. they voted to change rates.you sat on the sidelines for eight years or so, another two isn't going to make that much difference. >> well, i don't know because this time around we do see inflation rising and its key mandate is keeping stability. if you have inflation at 2.2% -- >> that's entirely because of the exchange rate. the bank of england says this is temporary and we're going to look through it because the effect of the reduction in the exchange rate will wear off within a year or so and the underlying domestic, domest domestically caused inflation, essentially unit labor costs, is still very low. >> charles, we're going to have to leave it here. interesting discussion. thank you for your thoughts. >>> still coming up on the show, president trump wades into the gulf diplomatic crisis lending support to the arab power's isolation of qatar. we'll cover that story in two. >>> welcome back to the show. want to bring you the latest on the situation in iran where seven people have died in an attack at the irani

the other half of the mpc will be happy the market is pricing in a rate hike.t is going to help provide support for the pound. anna: the inflation report in may with the message the governor was trying to give. it was suggesting rates could go up in the market did nothing to believe them. now things have changed. there is another suggestion of not looking through the spiking inflation just because it is driven by the pound, some of the pound weakness has a long-term impact on inflation forecast. she says inflation forecast to be about target this year. so, why not act? michael: the paper we had from forbes a couple weeks ago underscores the bank of england, while their main focus is hightion, because of the pass through from the exchange rate to inflation, it means they are looking at the currency a lot. the link between the currency and inflation is three to six months, which gives the current profile. inflation should be three to six months. any weakness now good see higher inflation in the u.k. almost 4%. anna: michael sneyd stays with us. later on bloomberg

several people are being recognised for their bravery among the mpc keep palmer killed as he tried toing parliament in the westminster attacks in march, he has been awarded a posthumous george medal. for pcs craig nicholls and jonathan knight who arrested the man who killed jo cox mp, queens gallantry medals. bernard kenny who was with the mp received the george medal. esau jo and he tried to save her and we cannot thank you enough. and the two boys, similarly unarmed, just went in. they knew that he was armed, but not a thought. theyjust went in. we are absolutely delighted. true heroes. true heroes. and the last surviving member of the famous dambuster rates, johnny johnson, has been made an mbe. in the world of music 19605 eurovision winner sandie the world of music19605 eurovision winner sandie shaw becomes an mbe. chart—topping singer ed sheron has also been made an mbe. i'm on record as having said, why would i learn algebra, i have no intention of going back! billy connolly says his knighthood i5 going back! billy connolly says his knighthood is likely to produce a 5trong knigh

reasonable chance of one before the end of this year, if you follow the tea leaves of the members of the mpcsaying one thing, slightly contradicted by whatjohn one thing, slightly contradicted by what john cunliffe one thing, slightly contradicted by whatjohn cunliffe had said earlier the same day and then mario draggy saying something that the market since it —— interpreted differently. all around the world, you're getting these inklings about rates. and rates have gone up in countries further afield than those main ones. we are in a period now where interest rates are beginning to take up interest rates are beginning to take up because the global economy is in not bad shape. in europe, it is picking up quite nicely. we have economic data out later today which signals the easing of easy money, as you might say. consumer data numbers, consumer confidence and mortgage lending, both are expected to be reined back a little bit. you can see there is caution in the market. is that why the markets are up market. is that why the markets are up this morning? the ftse is up two thirds of 1%. partly t

we have had so much discussion since one week ago, given the comments, the split with the mpc, and depending on various factors, it seems rates could after all go up. he may be looking toward that eventuality. it brings it back to the unreliable boyfriend comments. are we in that territory? paul: [laughter] it is so difficult for him. it looks like it will carry on, wages are growing at the same pace as inflation, so that means people are losing money. as economy is not growing fast as it can be, so you have this risk of stagnation temporarily. what does the central bank do? if he raises rates, it might inflation,ffect on but it may be bad for the rest of the economy is he says, we are going to carry on seeing this risk the other way. a difficult situation. others will be speaking as well, constant chatter. what will they learn from one another? them we like this idea of having a coffee afterwards or having lunch before, chatting about what is the situation here? it was interesting, a note i read this morning by an analyst in colorado, he saying that the noises we are getting out of the cent

thing is the three dissents were a surprise, but all three of these are the external members of the mpcthey are not the core members of the group. my expectation is carney they will be inclined to work through this, but it does illustrate in real-time the convocations of stagflation for a central bank. >> the bank of japan has maintained its monetary stimulus program, saying improving consumption will improve the economy. the board voted 7-2. it's inflation target remains elusive. just like for many central things around the world. >> it is really no drama kuroda here in japan. they just want to keep everything steady, that is because ultimately, economic conditions are good. they are improving modestly. there is neither a sign of a big boom coming, so no risk of any bubbles anywhere. at the same time, you do have a situation where price pressures are few and far in between. so for the bank of japan, it is very much steady as she goes. >> the boj did change one thing. that was its conception of consumption. how important was that reassessment on household consumption? >> >> the comments

there has been a big split on the monetary policy committee recently and connie is focused on the mpc fec, which looks at financial stability and took the decisions today. by raising the capital buffer, that in essence tightened conditions of it. it kind of gives carney a bit more leeway in terms of holding off on any changes in monetary policy come august. mark: so by default, michael, one could say that the boe today titans conditions because of the countercyclical buffer. can we take away the same from mario draghi speech? look at the reaction in bonds. look at the reaction in the euro. are we close or less accommodative of policy from the ecb? michael: is definitely the reading today. look at the reaction from the bond market worldwide and yields went higher as i/o draghi suggested that deflation is a thing of the past and inflation is coming now. you have to drill down a little bit. he also went on to talk about being slow and removing accommodations and being prudent. toy do not want the markets overreact and think the ecb will move to quickly. he does seem to suggest that the t

he said taking away the mpc where inflation is rising. he said they will look through.- slowing inflation globally. what is it mean for bond markets when we look at the u.s. 10-year , it is not going anywhere. part of that is having to do with bond investors not believing the fed will go again this year. richard: i think investors think the fed will not go as quickly as many have thought. same thing with the ecb and the boj. the ecb and boj are on hold, but the fed will probably not raise rates as higher as quickly. mark: they are below 50% for the rest of the year. muchrd: i think it is very hard to play for. i think we will probably see the fed may be done for 2016 and possibly get one more in. just may as well tell you both while richard jones is died.that helmut kohl has the german chancellor who saw a reunification. this is according to a newspaper and he was the leader of the cdu before angela merkel. a very important figure in the 20th and 21st century. helmut kohl is dead. let's check in on bloomberg first word news. courtney: pre--- queen elizabeth and prince w

there's no ceiling and floor we've seen every day there is a -- an mpc member making a comment, someement on brexit it falls and rises between 1.25 and 1.30 there's a huge amount of volatility in sterling nobody knows where we're going it's unfair to say there's no difference here. we have gone from frankly the certainty of harder brexit to uncertainty of we don't know what we're getting so we'll see 18 months, two years of real volatility in sterling >> peter, these one-year anniversaries allow us to reminisce and look back at the type of shock and surprise that was associated with that moment when we learned britain had voted to leave the european union. the economic data tells us one story. how would you sitting in london say consumers have reacted >> that's the thing we have to watch closely. you saw the government immediately responding both by -- on the monetary decisionmakers pushing liquidity into the system. you saw a roll back by fiscal authorities. treasury has not moved on austerity. you saw corporate spending and investment capex frozen and rolled back. one thing keeping

you are an economist, you have been on the mpc, you understand how the british economy works.hould i be feeling as a ceo of a british company? how do i run my company, go to my staff and say this is our plan in this environment? toughguy, it is a really question on i do not pretend to know. first you go to your staff and say, i do not know what the plan is, and that is ok. we are selling, the u.k. is solid on fundamentals. it may take a few months to shake out, we will not make major decisions until it is over. obviously it is negative for the economy, but they hold on investment and restrains a risk-taking and performance, but answer.e best possible you can talk about british history. there have been other periods of extended national security uncertainty. we can wait those out. if you are thinking beyond the next three or four months, you have to be thinking that this u.k. is not a place you want to increase investment right now. dems say the labour lib does not do the corporate tax cuts of that may and the tories were talking about. on the merits you can argue that is a goo

i think the balance of the mpc is likely to remain tilted, keeping policy where it is.e uk's hand has been weakened so much and the u.k. negotiating position is a whenger, with that not -- that leave you to believe there is going to be a softer brexit? case, growth comes back . if that scenario wrong? timothy: i don't think it is. their problem with it is, in the meantime, we are going to have a lot of headlines volatility. the concessions the u.k. has made so far are concessions that were likely going to be have to be made anyway. a -- those are concessions that probably would have had to be made. are left with is the hard negotiating point. from there, that is where i see a lot of uncertainty hitting the headlines, impacting sentiment, potentially impacting investment intentions. long-term, i think it is a case that there is now, especially with the debacle of the election, there is a case for a softer brexit. in the meantime, it is going to be volatile getting to that stage. guy: i don't understand how you price the u.k. right now. in some ways, you want to pricing r

anna: yet three members of the mpc voted for a rate hike.e know why, because cpi is on the rise. >> well, if you go back to it, that's the bank of england's objective, to control inflation. inflation is too high. matt: what's the best way, then, to get us out of stagflation? i know central banks have been fighting with this for decades, but is it fiscal policy that needs to change? >> it is. we said earlier that austerity is dead, and it is. they need to turn the tax on. -- taps on. we should expect that not just from the u.k., lots of governments around the world. anna: philip hammond said yesterday we are not deaf, in response to pressure about austerity. thank you. nick stays with us. let's have a quick look at what lies ahead. the paris air show gets underway today. the u.k. parliament is said to thursday, i and on european union leaders start a summit where they will discuss the relocation. matt: coming up, rex tillerson tries to resolve the crisis in the gulf, entering its third week. we will bring you the latest on that. this is bloom

mark carney says the mpc may need to raise rates. more to itlittle bit than that.is the economist at ubs will management. -- ups wealth management. mark carney, quite aggressive. the second part of his sentence was, if i see wages, i might be moved. you were not going to see tremendous move. concur? tol: i think it is unlikely see huge moves. the wage data we should be careful about. when you get into the detail of what is happening with wages, the weakness in wages is fairly narrowly focused. it is the financial sector. that is where you are seeing weakness. in that country at large, the financial sector is not that significant. you have a narrow decline in wages. other wages are holding. it is a somewhat mixed picture that comes through. manus: take a look at this. i quit is the title of this chart. sawcan see the run up we through the brexit debate. the lady is we have leaving the bank of england. it could be setting up alarm bells. when you look at a chart like that and we just had the wages conversation, that worries me. one of the features we have seen since

even in light of this hawkish swing on the mpc, the second half last year that we have been expectingare not seeing any sign in these gilt yield of what is effectively a more optimistic outlook, which would drive the yield higher. we think the market agrees with us that there is a discrepancy between the data and what the hawks are now starting to say, and ultimately, we hope and expect that the data will win out and that this will not result in any action. matt: why is there's a much demand for bonds -- so much demand for bunds. well, thereically, is obviously a global element to these markets. they do not always trade in exactly the same direction, but they tend to generally move together. they are commoditized markets and yields have been coming off everywhere, led by the u.s., since january. it has been a b calibration of expectations about fiscal reflation and the growth outlook for the u.s. as well. even though the outlet has improved for the eurozone, everything is still relative, and the ecb inching towards reducing maximum monetary commendation is welcome, but we are not look

academy high school in chicago and bob weiner, president of weiner public news, op-ed columnist and mpc headliners team member who helped organize the luncheon. michael smith, ceo of green smith public affairs and contributor to campaigns and elections magazine. caroline hendry, executive director of the education writers association. thank you for joining us today. i would like to acknowledge additional members of the headliners team responsible for organizing the event, betsy fisher martin, kristin, eleanor herman, press club staff liaison lindsay underwood. thank you all. [applause] >> long before today's guest became a politician, he attended sarah lawrence college, spent his first two years studying to become a preschool teacher before politics and long before he was president barack obama's chief of staff, chicago mayor rahm emanuel taught preschool. maybe manual's love of education followed him throughout his political career, into his tenure as chicago's mayor where he oversees the third-largest system in the united states. he is credited with adding more than 200 hours to the s

we got news of a new member of the mpc as well. let's talking little bit about equity markets. stoxx 600 on the imap function. this shows you where we are. we are up .2% for the securities as a whole. the consumer discretion rate, the biggest gaining sector. he won it, even if it was not as strong as some people expected. german stocks hit a record high 's session.y let's talk about china because it is important in terms of china and is placed in the world. perhaps, forucky, their attempt to get their domestic stocks into the benchmark in this index will step his comes tonight, -- in this index. this comes tonight. because of domestic listed stocks, they are so much smaller now than their offshore traded counterparts, maybe it matters less than it used to. china had to shrink its ambitions to get this fourth attempt. if they do get the go ahead, it will take up half a perecent of the msci index. guy: thank you. let's deal with a little more detail about where the markets are at the moment. barclays is movin not really one move. guy: we have your percentage changes in there. mat

that said, we are seeing certain mpc members get nervous about the high inflation in the u.k.. agree that we will see subdued inflation? maximilian: i think it will be transitory. when we look at the inflation expectations, five-year breakeven in the u.k., 10-years, they trade at labels that those make too much sense as you go to 10 year or 30 year breakeven. from here, it is probably down. francine: what is the one question you would want to ask prime minister may right now? is it if she stays, if we will negotiate a soft brexit? maximilian: to be honest, i think that the stands that we take in the u.k. between soft brexit and hard brexit is something in the next couple of months will not really be answered, particularly not from the continent of europe. theannot forget that elections in september in germany. inre will not be much leeway the next couple of months to negotiate. i don't think the leeway in the next couple of months is very great. one key point is the uncertainty. the other is how long this will take. it could be 10 years from now, we might still be talking about

growth coming through and we have seen mark carney saying that means that he and the majority of the mpc will be unlikely to be putting interest rates up anytime this year. they want to see which growth under. they want to see the weakness in retail sales will not persist, and there is a good chance it may do, given that real wage growth is turning sharply negative. that suggests that the likelihood we see a dramatic curve steepening are lower, at least for now. francine: we heard from charles evans, thing the central bank officials need to show a commitment to reaching their goal on u.s. inflation. speaking in new york yesterday, the office described eight years of low core inflation as a serious policy miss. >> core inflation is generally underrun 2%. l years below ful target and this is a serious policy miss. francine: let's get more now with mike bell. mike, is the difference between what he is saying, and what john janet yellen is saying? mike: i think janet yellen is right. both in the bank of england and in the fed, you see a divergence of views. he falls in the dovish camp. now t

the mpc voted by five members to three to maintain the key interest rates in a record low 25 basis points the biggest division among britain policy leaders in six years. promptedn tower fire the emergency to cancel -- philip hammond had been expected to give a speech on the economy. this morning, speaking at the euro area meeting and luxembourg hammond outlined his approach to leaving the e.u. a we are just about to start negotiation. we have set out very clearly our desired outcome and in the article 50 letter that we have sent but it is a negotiation. as we go into that negotiation my clearview and i believe them as the -- the view of the majority in britain is that we should prioritize protecting jobs, economic growth, and prosperity. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. salek and this is bloomberg. francine: this time last week the u.k. was waking up to one of the biggest election upsets of recent times. theresa may's conservative party ahead by as much as 20% in the early polls, lost the majority in parliament. jer

particularly the twitching this we are starting to see at the bank of england on some parts of the mpc. the u.k. economy is still struggling with some fairly significant challenges on a number of different fronts. for investors, shocks have been on the political front. that's been confined to a broad and stable range of this point i think we are waiting for the next shoe to drop, waiting to see how the economy performs and with the bank of england's story is going forward and how these brazen negotiations really unfold. alix: i try to wrap my mind around the fact is a stronger european union -- is better economic data good for theresa may? or does it make her job harder? of the dayhe end come it strengthens the position for eu 27, but i wouldn't wish to stress too much on that point. we know the clock is ticking and we know that we won't be able to in the timeline available, it assuming they don't extend 2015,e 50 beyond march they're not unable to come out with a new trading arrangement with the eu and the u.k., so they have to move other to the transitional phase or if they wish to,

what you think of the mpc declining to meet with officials before the policy meeting and today's decisionministry represents the government of india. and the finance ministry is an accountable institution. the government will give its own assessment of the economy to the reserve bank. is a normal done thing. whether it's done orderly or in writing is immaterial. it's an important input that the economic division of the finance ministry gives its input to the central bank. ultimately it's what the new authority of the central bank itself to decide the rates. we always respect the jurisdiction. jonathan: should they cut rates today? they have already announced the policy. normally i don't comment on it. the ministry makes a formal statement. jaitley, great to have you on the program. ♪ ♪ jonathan: the countdown to super thursday. the president trump nominates an fbi director to replace jim comey as he begins to testify. they go popular is taken over after the lender was likely to fail. the global economy has a lot riding on whatever comes out of d.c. apparently. an update shows the u.s. is

theas a majority of that on mpc so he will be supported but does not have to do much. parliament, willem buiter in new york, and kevin cirilli in washington. his tweet, there it is. his personal lawyer, the white house counsel, and eight others lawyers to be do not want him to do this. why is he doing it? kevin: i have spoken with several sources analyzing the president's twitter as a whole. in his tweet it uses the word "vindication. statement -- the word we heard. so from the white house's perspective, a don't like it when he tweets and it is not on script, but that tweet he tweeted is pretty much scripted and that it is a repackaging debt in that it is a repackaging of the public statements he used before the testimony as well is what his attorney said. that is a legal tweet. francine: i like the way that you put that into perspective. what is the gop talking about today? will it be the tweet, the testimony, or how they can regroup and push things forward? kevin: members of the house freedom caucus will be releasing their tax principles. this is seen as an opening b

i do wonder on the other side of the bank of england come on the mpc, whether this will be enough in any way shape or form to stop those talks for rate hikes because inflation is increasing well above their mandate. guy: you wonder whether or not this will be enough just to keep that story on hold for the time being. i suspect that it probably will be. there is a balancing act going on in the bank of england. some of those that may have voted for a rate hike may believe that their core concerns surround the issue of credit and how that is pumping up and inflationary story. that is clearly being driven by the currency. to may end up being able take that off the table by doing what we were talking about here, but we don't know yet. we will have to see what effect that ultimately has. jonathan: guy johnson, great to catch up with you as always. present mario draghi spoke earlier in portugal and said the threat of inflation is gone and reflationary forces are at play, opening the way for the start of tapering potential. it is headed for the biggest quarterly gains in the past six years.

the pressure is going back on the mpc. i agree with much of what andrew said.t i disagreed, i do not think it was a mistake to cut in after brexit for two reasons. all of the signals that we should have looked at in 2008 were flashing again in 2016 after the brexit vote. the other one is if unexpectedly consumers were saving and that is coming to an end very soon be would think, they would precautionary saving and we see real wages falling. i think the risks are substantial. i would not be making a decision to make a cut the now. i would not be. i would be waiting and a look and expecting i might have to do it. i agree with andrew, not the right time. it might come to be the right time soon so stuck i think it was a big mistake of the fed to raise rates and much of the slowing in the u.s. economy is they mistakenly did that. we will see. john the bank we are not a but were not able talk about the fed. jonathan: we're night, the fed. >> andrew was free am i allowed to return? >> we took some really dramatic actions. very low levels which are in my view is unsust