in these circumstances the mpc chose to supportjobs these circumstances the mpc chose to support jobsimited spare capacity in the economy, real wages are picking up an external price pressures are declining. with domestically generated inflation building and the prospect of excess demand in the economy emerging, a modest increase in the monetary policy is now appropriate to keep the inflation at 296. uk appropriate to keep the inflation at 2%. uk growth in the second quarter is estimated to have rebranded as expected, consistent with the mpc was myjudgment expected, consistent with the mpc was my judgment that the slowdown expected, consistent with the mpc was myjudgment that the slowdown in the first quarter, that primarily reflected the weather, not the economic climate. construction output rose in may at its strongest rate in two years. retail sales grew at the fastest pace in three years and broader survey indicators of output growth have been along with the committee's expectations. the latest expectations, conditioned on the gently rising path of interest rates, uk demand is exp

an mpc but even more so as the fpc which talks all the time to the mpc, a lot of time looking at those points. so we do look at exactly this issue. the other thing we do is look at not just aggregated data by cohorts that we look at survey evidence in terms of ability to handle rate increases and what will individuals have to do intentionally to adjust to these rate increases. issues is whether the cohort -- what's the debt burden of the poorest households, was the nature of the debt burden of the poorest households. and what's the impact of that. mortgage debt, quite often credit card debt unfortunately or overdraft debt to that's relatively rate insensitive. it's relatively high cost debt and it's very difficult position to be in. pass-through of a 25 basis point change on amid the ish team credit card bill relatively minor. in many cases it is not passed on by the credit card company. ,o go to the specific question 2.5% ofmate is around households. this is through the energy survey. something we run on a twice he or basis to assess precisely these issues. about 2.5% of households wo

in these exceptional circumstances the mpc rightly chose to supportjobs circumstances the mpc rightlybs and circumstances the mpc rightly chose to supportjobs and activities, while extending the horizon over which inflation returned to target and that strategy has worked. today employment is at a record high, there is very limited spare capacity in the economy and external price pressures a re in the economy and external price pressures are declining. with domestically generated inflation building and the prospect of excess demand emerging, the modest monetary policy is now appropriate to return inflation to its 2% target and to keep it there. uk growth in the second quarter is estimated to have rebranded as expected, consistent with the mpc buzz myjudgment that the slowdown in the first quarter primarily reflected the weather, not the economic climate. construction output rose in may at its strongest rate in two years, retail sales grew at fastest pace in three years and this has been in line with the committee's expectations. in the mpc‘s latest expectations, uk demand is expected t

this is the mode that the mpc should be in they should be following the long-term strategy of raisings and then holding back from that if there's negative news. >> when willem talks about returning to normality what do you think that looks like? we are expected the bank of england to talk about this eke qual l equilibrium rate >> i thought we would move to higher level of interest rates in two stages. the first is to get to 2% to 3%. that's slightly above the inflation target, but it at least means savers are getting something. then central banks need to take stock and see how the economy is responding to that hopefully there's an opportunity to move rates up to 3%, 4% over a number of years. >> when you talk about savers here, the incentive structure that the bank of england policy has created, what about on the borrowing side do you think that this policy has gone on for too long and created excessive borrowing? >> i think there's some evidence of that. we saw figures for the household sector in 2017, which showed that borrowing less saving was at the highest level since 1998. and w

interesting that you say that, given that the mpc voted unanimously.cern is that the mpc may be looking too far ahead in planning the monetary policy and not looking at the economic data of what is going on now and what will go on in 18 months when the interest rate rise will hit the real economy. a 0.25% rise will hit the real economy. a 0 . 25% interest rise will hit the real economy. a 0.25% interest rise won't have much ofan impact 0.25% interest rise won't have much of an impact on consumers, but at a time when there is political and economic uncertainty, raising the rate could be a tipping point for many businesses and consumers. but even though it is only a quarter of 196, even though it is only a quarter of ‘io even though it is only a quarter of 1%, your point is that it unnerves people if they are having to pay out elizabeth extra a month, for example, ona elizabeth extra a month, for example, on a mortgage? —— a little bit extra each month. business confidence is weakening a little bit. businesses say that the key point for them is the cost

circumstances where the balance of those three factors would be to inflationary for the tolerances of the mpche end, we can stretch the horizon. we can support jobs and activity, but up to a limit. we have to make those judgments at that time. shery: from more, we are joined by stephanie flanders. she recently also spoke with the governor. tell us about his thinking in going through with this rate hike. >> we had a lot of debate today on how that rate hike will be affected by the brexit dynamic. they are facing an economy that could be negatively affected by brexit. at the same time, there is not a lot of spare capacity. inflation. much wage we have a sense that we have been many years in this recovery and it is probably time to have a bit of a tightening. it seems like it is difficult to make that call when you could have the economy seriously negatively affected next year if you had a hard brexit, no deal with the europeans in exiting the eu. shery: did we get insight on the neutral rate and the timing? >> loads of insight on the long-term neutral rate. interest farate of out in time, where

the mpc at that point will take them into account. would it automatically mean a rate cut?et of circumstances like what happened post-referendum, where the balance of what happened to the future supply of the economy demand, which was more of a business hit than a consumer hit, if you recall at the time, and the exchange rate -- the culmination of those things made sense for us to extend the horizon where we brought inflation back to target, supported the economy, and today , it does look like the right call. we have inflation coming back to target. we have record employment growth. we have got real wages starting to grow. we are in a better position. but there are circumstances where the balance of those three factors would be too inflationary for the tolerances of the mpc. we can stretch the horizon and support jobs and activity, but up to a limit, and we have to make those judgments at that time. rishaad: mark carney's eking to mark carney speaking to francine lacqua. concerns about earnings in the global selloff in tech have dragged tencent down since it's january high.

the mpc at that point will take them into account. it does not automatically follow .ertainly a set of circumstances like what happened post-referendum, where the balance of what happened to the future supply of the economy demand, which was more of a business hit than a consumer hit , and the exchange rate, the culmination of those things made sense for us to extend the horizon over which we brought inflation back to target. fast-forward to today, i would say this, it does look like the right call. have inflation coming back to target, record employment growth, real wages starting to grow. there are circumstances where the balance of those three factors would be too inflationary for the tolerances of the mpc. we can stretch the horizon, but up to a limit. we have to make those judgments at that time. anna: that was the bank of england governor speaking with bloomberg. let's continue the conversation about the u.k.. theresa may is meeting emmanuel macron today. the unusual meeting is said to be part of a diplomatic drive to win european leaders over to may's brexit vis

in the view the mpc.tween that overall level and where the equilibrium rate is in the u.k.. a lot of that has caused -- is caused by the uncertainty around brexit. what isu look at happening to business investment in this country right now. it should be on fire. it is just moving very tentatively. away that uncertainty, one would expect using business as an example, that they will adjust quickly to the new realities. investment comes in and you between thee up equilibrium level, and practice in the u.k., and global rates. that is the other element. if you are sitting in the market, you have to make a judgment, do i agree with that framework? i would suggest -- the crucial thing is what do i think will happen with brexit and that uncertainty and the impact on the economy? in fairness, a lot of the risk in you payt exists assets and a lot of the shorter term moves and markets are being determined by different views on where this crucial negotiations going to go. francine: is this your last interest rate hik

. >>> sterling moved sharply lower against the dollar that was after the bank of england mpc voted to raise rates to the highest level in almost a decade we saw that brief pop and then it fell down after that. this was amid heightened brexit uncertainty with governor mark carney suggesting the path to raising rates should be gradual and limited. >> the box also provides context to our long-held guidance that rate rises are expected to be limited and gradual. limited because we think those structural factors that have pushed down on the interest rate are likely to persist. gradual because we think domestic shorter term factors, particularly those headwinds from uncertainty and fiscal drag will fade slowly as a result our star can be expected to rise gradually and policy needs to walk, not run, to stand still >> mr. carney said a rate rise per year would be a good rule of thumb, but said this would be dependent on what happens with brexit discussions he also said the possibility of a no-deal outcome was uncomfortably high and added the government should do all it can to avoid such a sce

there is also, in the view of the mpc, there is a wedge between the overall level of the equilibrium where it is in the u.k. is in the u.k. a lot of that is caused by the uncertainty around brexit, which -- you look at what's happening to business investment in this country right now, it should be on fire. it's just moving very country right now, it should be on fire. it's just moving very tentatively. take away that uncertainty, one would expect using business as an example that they would adjust quickly to the new realities. realities. investment comes in, you start to move up between the equilibrium level and global rates. so that's the other element. if you're sitting in the market, you have to make a judgment. do i agree with that framework? the crucial thing is, what do i think will happen with brexit and that uncertainty and the impact of the economy? in fairness, a lot of the risk premium that exists in the u.k. assets and a lot of the shorter term moves in markets are being determined by different views on where the crucial negotiations will go. ♪ guy: this is "bloomberg bes

to february of 1975 for this to be inflationary, to have the bang for the buck in terms of what the mpc next on interest rates, there has to be an increase in earnings uk average weekly average minus bonuses up 2.7% in the three months through june. that's the weakest increase since january. 2.7 % increase, weekly average earnings june was 2.8% the figure, the net figure including bonuses is 2.4%. the poll was 2.5 some of the improvement that did take place, the public sector pay was going up private sector was down. >> that's all those advisers on brexit, isn't it i want to test your theory do you think if we had a hot number today it would trigger a rate hike? it feels like the window for hiking might have closed after the august one we had. and there's no more room now given that the brexit scenario coming our way next year >> we have to look at it in relation to what we're seeing in the broader inflation rate the fact that the average earnings are still lagging the inflation rate, it says a lot about the broader market concerns about productivity again in the united kingdom. the pro

the mpc is delivering a hike, we will speak to governor mark carney following the meeting. we are less than half an hour away from the open of european trading. let's take a look at the fallout from the drops that we see across asia. it is not so bad as far as european futures at least right now. you do not see ftse futures down more than .2 of 1%. you have your own issues, your own news to contend with in great britain area dax futures are down .6 of 1%. take a look at treasuries. not much of a safe haven bid either. right now we see the yield at 896 so the yield coming down a bit from such a high level means that people are buying bonds but they are not lying bonds that much especially considering they had 3% to entice them. at one point is -- one point, 4% drop to scare them into the did. what do you see on the gmm? guy: you see that china story down 2.5% as csi you say. it was worth earlier in the day. the naked eye -- nikkei trading down overnight. we see action in the [inaudible] market. that is what it is making clear this morning. asian markets under pressure. the s

in those scenarios, where interest rates should be lower, then the mpc, which meets eight times a yearf a percent in nearly a decade, how many more should they prepare themselves for? well, we have been saying, and i'm happy to repeat it, that this is not the world precrisis. this is not the world where we're on the road to interest rates being 5%, which is what the average was for the bank rate since this institution was put in place in 1694. we view that it is a limited amount of rate increases at a very gradual pace, the level of interest rates consistent with staying in the speed limit, people getting ahead, and wages growing faster than inflation, is much lower than it was previously. i don't want to be tied down... 2%, 3%, where are we headed? the outside band of that is in the 2—3% range, but there are factors in the uk which means it is lower than that. let me answer it this way. if you take what financial markets think, which is about one interest rate increase a year, of a quarter of 1% per year for the next few years, you more or less hit key inflation targets on the horizon

he don't have a clear sense of what that is operating behind in the mpc but statement, they emphasized concern regarding the deceleration of the economy and how they were possibly trying to gauge where inflation might go before taking further steps, but that was quite a policy mistake. matt: as a layman, i watch this almost like a slow-moving train wreck. you can tell exactly what is going to happen and it does when they make mistakes like that. doesn't president erdogan see the same thing, or does he have reason to drive the lira down and watch yields soar? think hei don't fundamentally wants a financial crisis in the country or lira to suffer or see soaring yields, to his prescription unorthodox policy regarding how interest rates and inflation interact is possibly fundamentally at the core of the issue, and even if we get past some of the diplomatic squabbles we are seeing right now, that becomes the core of the issue around central bank independence, how erdogan wants to see economic and monetary policy play out, and whether he is willing to let more technocrats take over? matt: is

in those scenarios, where interest rates should be lower, then the mpc, which meets eight times a yeart one above half a percent in nearly a decade, how many more should they prepare themselves for? well, we have been saying, and i'm happy to repeat it, that this is not the world precrisis. this is not the world where we're on the road to interest rates being 5%, which is what the average was for the bank rate since this institution was put in place in 1694. this is outside source live from the bbc newsroom. our lead story is: we're expecting results from zimba bwe's presidential election to be released very soon, a day after the country's capital was rocked by violent clashes between police and oppostion protestors. let's remind you quickly over we are with that announcement. that is the electoral commission speaking live in the capital. it is a fairly long process we are finding. very dense information. votes for each candidate in each province. there are ten promises to be announced. we are ten promises to be announced. we are hearing that tonight we will hear the results from a nin

i think the pound reaction straight after the mpc meeting was quite telling.ngland is facing growth which is slowing, very low levels of productivity, very low levels of investment growth, , consumer that is lowered inflation coming down, and all of this without considering brexit risks. over the last few months or weeks even, brexit risks do not seem to be declining. in fact, they seem to be on the rise. in that sense, the market is not going to go in and say we have slightly higher rates, i might as well by the pound. the market is going to go with a slightly more pessimistic result. having said that, i think what , the very lastd sentence, is very telling about the bank of england's reaction function. they are outcomes even within that if they destroy supply, it may require them to hike. i do not want to consider those outcomes here and now, but they are not the best kind of outcomes. francine: do you think there's a difference between what governor carney is telling us and what markets are telling us? >> this is a policy mistake. that's what the market is

in those scenarios, where interest rates should be lower, the mpc, which meets eight times a year, i'merest rate above 0.5% in eight years come so how much more should they expect? this is not the world precrisis, we're not on the road to interest rates being 5%, which was the average for bank rates since this institution was put in place in 1694. we view that it is a limited amount of rate increases at a very gradual pace, a level of interest rates consistent with that speed limited, wage increases being slower than they were previously. ido i do not want to be tied down. 296, 396? where are we headed? the outside band of that is in the 2—3% range, but there are factors in the uk that mean that it is lower than that. let me answer at this way — if you take what financial markets think, which is about one interest rate increase per year, of 0.25% per year for the next few years. you more or less get back over the interest rate horizon. people want a rule of thumb for now, i would use that. with the caveat, the same one for virtually economic conversation ——virtually any economic conver

they say the mpc should have waited until the november meeting. >> the important thing is this is the the economy given the track it is on. obviously, there is a wide range of brexit outcomes possible. we all hope, by the end of the year, we will all be much better informed on which path of the u.k. and the eu are taking. zimbabwe, the opposition ndc is alleging that rigging at least six people were killed in protests. the violence may undermine efforts to reunify the nation batteredld an economy under robert magali -- robert mugabe. a bill includes affecting sovereign debt in russia and requires a report on president putin's assets and net worth. the fbi director says he is closely watching attempts to metal in this year's midterms. >> even as we speak, we have open investigations with a nexusn influence this -- fielding offices across the country. make no mistake, the scope is broad and deep. jenna: apple is making market cap history. an almost 3% gain on thursday made it the first american company to make it worth a trillion dollars. applebee amazon and google to the landmark. beat

abuses -- mpc. these are all issues me to deal with. i think chairman review interment manasses -- of all their work over the years. and honduras, i have seen firsthand. i have seen the gang of violence , the political instability, crushing, and impunity. that played on the 2017 elections, although there is now an elected leader, the question about the integrity of that election lingers on. the anticorruption commission needs to be supported and the support for it has been inconsistent and we look forward to our commitment to making sure the people of honduras have the support or honesty and their system. i do also want to mention the -- case. her. or called for international observations. all are somewhat suspect as to how that case will perceived. we know there is an effort. there will be -- the u.s. involvement will be important. as the chair of points out, there on the tier two watch on tier one and 23. a country as challenges on trafficking and labor. and on narcotics. drug issues. i'll be interested in hearing public music review

the mpc, which sets rates, said the economy was in a better shape with record—low unemployment and rising and financial experts agree with that and that today is the day to raise rates. the economy has recovered from the wea k the economy has recovered from the weak patch that will enter in the first part of this year. unemployment is very low and the policymakers believe that the economy is at risk of exceeding its speed rate. so it's time to take the foot off the accelerator. —— the majority of economists and financial experts agree with that and that today is the day to raise rates. but some think the bank should hold fire. here's why: in reality, very little has changed since may. if you look at the economy itself, all of the forecasts have been downgraded since, no real increase in wages, they have moderated in terms of increased. there isn't really no need to do so but i think they will be feeling compelled to because they said they would. so what would a rise in rates mean? if you're on a fixed rate mortgage, not much. that won't change til your fix runs out. if you're on a variabl