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Rishi Sunak proposes talks with UK union leaders in a bid to stop the strikes

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Rishi Sunak has called on Britain’s trade union leaders for talks on Monday in a bid to find a solution to the disruptive wave of strikes across the UK.

The UK prime minister said in a radio interview on Friday that government departments had written to the unions involved inviting them to start talks on Monday.

Workers including train and bus drivers, nurses and paramedics were taken strike To protest wage cuts in real terms at a time of high inflation.

Sunak had previously said he wanted a “mature conversation” with public sector unions over the next wage settlement for the 2023-2024 financial year.

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The prime minister said he wanted to have talks with unions “about what’s reasonable, what’s reasonable, and what’s responsible” for the country.

Our most urgent economic priority is to reduce cost of living And controlling inflation is the best way to do this to ease the cost of living, not just for nurses but for everyone.

But Sunak’s offer to discuss a wage settlement for next year falls short of union demands for higher settlements for the current financial year.

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Economic

Daly sees the Fed raising interest rates above 5%, but to what extent is not clear by Bloomberg

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15 mins ago

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January 9, 2023

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& Copy Bloomberg. Mary Daly

(Bloomberg) — San Francisco Federal Reserve Bank President Mary Daley said she expects the central bank to raise interest rates above 5% before pausing, though the final level is unclear and will depend on incoming data on inflation.

For the Fed’s next meeting at the end of the month, the central bank could either raise interest rates by 50 basis points for the second time in a row or slow down to a quarter-point increase, Daly said Monday in a live interview with The Guardian. Wall Street Journal.

“Doing it in incremental steps gives you the ability to react to the information that comes in,” said Daly, who did not vote on rates this year. She stressed that it was too early to “declare victory” over persistent inflation.

The Fed slowed the pace of rate hikes at its December meeting while stressing that additional tightening is coming and that borrowing costs will likely remain at high levels for some time in order to bring inflation down to the central bank’s 2% target.

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Daly said last month that she saw interest rates remain constrained for longer than seen by the markets, which have lowered their rates for this year. She said keeping the federal funds rate at its peak for 11 months is a “reasonable starting point.”

Fed officials meet on Jan. 31 and Feb. 1 and are expected to either raise interest rates by 50 basis points or slow the pace further to a quarter of a percentage point, although traders see the latter as more likely. Friday’s report showed that employment in the US labor market remained strong in December while wage gains eased.

© 2023 Bloomberg LP

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It is too early to declare the UK inflation threat defeated, says the Bank of England’s chief economist

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January 9, 2023

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The Bank of England’s chief economist said it was too early to say that the risk of inflation in the UK had been defeated and that existing conditions in Britain remained a problem of rising prices.

In a hawkish speech to a financial audience in New York on Monday, Huw Pill sent the message that the Bank of England is not done raising interest rates because the UK faced too many challenges simultaneously that would exacerbate the inflationary threat.

Bell said the UK was unique in facing the normalization of interest rates from very low levels, the need to fight the strong pricing power of companies, tight labor markets and the energy price crisis.

“The range of energy prices rises to cause notorious second-round effects in price, wage and cost dynamics . . . it is greatest when the corporate sector has pricing power and the labor market is tight.”

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Reiterating the Bank of England’s Monetary Policy Committee statement from its December meeting that further interest rate increases “may be required for a sustainable return of inflation to [the 2 per cent] target,” Bell added that his future vote will be influenced by the set of circumstances indicating that inflation is likely to remain persistently high.

“The distinct context prevailing in the UK – of rising natural gas prices combined with a tight labor market, adverse developments in labor supply and commodity market bottlenecks – creates the potential for inflation to prove more persistent,” he said.

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BoE Pill Sees Persistent Inflation Risk, Even If Gas Price Falls By Reuters

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2 hours ago

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January 9, 2023

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© Reuters. FILE PHOTO: A general view shows the Bank of England building in London, Britain on November 3, 2022. REUTERS/Toby Melville

By David Milliken

LONDON (Reuters) – Britain risks persistent inflationary pressures from a tightening labor market, Bank of England chief economist Howe Bell said on Monday, even if prices stabilize or fall.

Bell said in a speech he will deliver in New York later on Monday.

“(This) will strongly influence my position on my monetary policy in the coming months,” he added.

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The Bank of England has released a transcript of Bell’s comments ahead of the speech he plans to give to the Capital Market Association at New York University.

The Bank of England raised its key rate to 3.5% in December, up from 0.1% a year earlier, and financial markets expect the central bank to raise interest rates again to 4% in its next policy announcement on February 2nd.

However, economists and markets are divided on how much further the price hike will be beyond that. Inflation has fallen slightly since it hit a 41-year peak of 11.1% in October, and the British economy appears to be entering a shallow recession.

Bell said that even if there was a drop in natural gas prices, the main driver of the latest spike in inflation, that was no guarantee that underlying price pressures would fall enough for inflation to return to the BoE’s 2% target.

Bell said businesses and workers need to accept lower inflation-adjusted profit margins and wages than they were before the energy shock.

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“The more companies try to maintain real profit margins, and employees try to maintain real wages at pre-energy price shock levels, the more likely it is that domestically generated inflation will pick up its own momentum,” Bell said.

Britain is currently facing a wave of strikes as trade unions seek to reduce the impact of inflation on their members’ salaries.

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