Over in the US, automaker GeneralMotors and soft drinks and snacks firm PepsiCo have both beaten expectations.
GM has cheered Wall Street by raising its forecast for adjusted pre-tax profits this year, to $12.5bn-$14.5bn, up from a previous target of $12bn-$14bn.
GM chief financial officer PaulJacobson said:
“Our consumer has been remarkably resilient in this period of higher interest rates.”
PepsiCo, though, reported a slowdown in the US, where it recently recalled some granola products following concern over potentially deadly salmonella contamination.
But it still beat revenue and profit expectations, as demand for its sodas and snacks like Cheetos and Doritos in international markets drove growth.
Adam Vettese, analyst at investment platform eToro, says:
“Pepsico has delivered a solid set of results today given the backdrop of high inflation and the recall of its Quaker cereal products around the turn of the year tied to potential salmonella contamination.
That issue saw volumes plunge 22% at its Quaker Foods division. While Pepsi has already confirmed the closure of the factory at the centre of that problem, some question marks may remain for investors over the size of further fallout before operations normalise. Shares in the company were little changed in pre-market trading.”
Why has Huw Pill’s comments today moved the markets, when the BoE’s chief economist was at pains to point out that little has changed since his previous speech at the start of March?
Well, the probem is that while Pill claims there has been “little relevant news” to change his views, other policymakers may not agree.
Last Friday, deputy governor SirDaveRamsden declared that “the balance of domestic risks to the outlook for UK inflation” had “tilted to the downside” since the Bank last drew up its forecasts in February.
Ramsden’s suggestion that inflation could stay close to 2% target over the next three years was taken as a sign that the Bank was moving closer to its first rate cut in the current cycle.
Pill did concede that the first rate cut was closer than in March, but that’s due to time’s winged chariot rattling along, rather than changes in the outlook for monetary policy.
Huw Pill went on to cite today’s PMI survey to support his view that the UK economy has returned to growth, saying:
“Economic growth in the UK has resumed, albeit at a modest rate, over the past few months following the technical recession we experienced in the second half of last year.
And today’s survey data … certainly supports that view.
BoE's Pill: first rate cut is 'somewhat closer' than last month
Newsflash: The Bank of England’s chief economist, Huw Pill, is speaking in London now.
And he says that the first cut in UK interest rates is “somewhat closer” than at his last speech, at the start of March… but mainly due to the passage of time since!
Pill begins by telling his audience at the London campus of the University of Chicago Booth School of Business that he doesn’t believe much has changed since his last speech, on 1st March, when he said the BoE was “some way off” cutting interest rates.
Today, Pill argues that the picture has changed little in the seven weeks since.
He says:
In my view, against the background of a welcome decline in headline inflation, the outlook for UK monetary policy in the coming quarters has not changed substantially since the beginning of March.
Pill outlines how events in the Middle East are a reminder of potential external risks (although they haven’t yet had a major impact on energy prices), while the UK’s inflation rate dipped in March, as expected.
Pill explains that the Bank’s monetary policy committee needs to keep policy sufficiently restrictive to ensure inflation falls to 2% and stays there. But, he add, a cut in Bank Rate from current levels would not entirely undo the restrictive stance of policy.
And in conclusion, Pill hammers home his message that a “lack of news” means little has changed between St. David’s Day (1st March) and St. George’s Day (today).
Against a welcome backdrop of declining headline inflation anticipated by the MPC, the flow of conjunctural data since I last spoke on the monetary policy stance in Cardiff in early March has offered modest relevant news. This suggests little need to amend the assessment of the economic, inflation and policy outlook that I offered then.
In Cardiff, I concluded that, while we are making satisfactory progress in returning inflation to target, in my baseline scenario the time for cutting Bank Rate remained some way off.
That justified my vote to keep Bank Rate unchanged at the MPC’s February meeting and underpinned my subsequent decision to vote similarly in March.
The combination of little news and the passage of time have brought a Bank Rate cut somewhat closer. But the same lack of news gives me no reason to depart from the baseline that I already established on St. David’s Day.
Motorists have been hit by a jump in fuel costs, the AA has warned, with petrol across the UK now averages above 150p a litre for the first time since November.
Data collated by website Fuel Prices Online shows typical pump prices reached 150.1p per litre yesterday.
The average price of a litre of diesel is also at the highest level since November 2023, at 158.3p.
Luke Bosdet, the AA’s spokesman on pump prices, says:
“Inflation has been heading downwards at quite some speed but petrol’s rebound to 150p a litre leaves a big boulder in the road. Government data shows that for the fourth week petrol prices have been higher than at the same time a year ago. This last happened in February 2023.
Five days of falling wholesale costs, with the value of oil coming off the boil, offers hope that pump prices may not get much worse in the short-term. However, road fuel priced above 150p a litre grabs the attention of drivers and will lead some to re-tighten their belts on other spending.”