1
00:00:02,000 --> 00:00:05,600
Speaker 1: This is the Bloomberg Daybacurate podcast, available every morning on Apples,

2
00:00:05,640 --> 00:00:09,399
Speaker 1: Spotify or wherever you listen. It's Wednesday, the seventeenth of April.

3
00:00:09,400 --> 00:00:11,600
Speaker 1: Here in London. I'm Caroline Hepka and.

4
00:00:11,560 --> 00:00:12,440
Speaker 2: I'm Stephen Carroll.

5
00:00:12,520 --> 00:00:16,079
Speaker 3: Coming up today, The Fed's Jerome Pell concedes that ratecuts

6
00:00:16,120 --> 00:00:18,759
Speaker 3: will need to be delayed, as Andrew Bailey signals the

7
00:00:18,760 --> 00:00:21,439
Speaker 3: Bank of England may be able to move before the US.

8
00:00:21,760 --> 00:00:24,919
Speaker 1: The Chancellor Jeremy Hunt tells us that lower boring costs

9
00:00:24,960 --> 00:00:28,440
Speaker 1: could deliver a feel good factor for UK voters as

10
00:00:28,480 --> 00:00:31,479
Speaker 1: he hints at a possible autumn election. Let's start with

11
00:00:31,480 --> 00:00:32,320
Speaker 1: a roundup.

12
00:00:32,000 --> 00:00:34,600
Speaker 3: Of our top story, the Federal Reserve Charge your own pals,

13
00:00:34,640 --> 00:00:38,280
Speaker 3: as policymakers will likely have to wait longer than previously

14
00:00:38,320 --> 00:00:42,080
Speaker 3: anticipated to cut interest rates. His comments that follow a

15
00:00:42,120 --> 00:00:45,600
Speaker 3: series of surprisingly high inflation readings and jobs data that

16
00:00:45,640 --> 00:00:49,680
Speaker 3: suggests the US economy remains resilient. Speaking during a panel

17
00:00:49,720 --> 00:00:52,520
Speaker 3: discussion in Washington, Pal said rate setters need to see

18
00:00:52,520 --> 00:00:55,640
Speaker 3: more evidence that the pace of price rises is cooling.

19
00:00:56,280 --> 00:00:58,600
Speaker 4: So we've said that the FMC that will need greater

20
00:00:58,680 --> 00:01:02,680
Speaker 4: confidence that inflation is more sustainably toward two percent before

21
00:01:02,720 --> 00:01:06,440
Speaker 4: it be appropriate to ease policy. We took that cautious

22
00:01:06,520 --> 00:01:09,880
Speaker 4: approach and sought that greater confidence so as not to

23
00:01:09,920 --> 00:01:13,440
Speaker 4: overreact to the string of low inflation readings that we

24
00:01:13,480 --> 00:01:14,880
Speaker 4: had in the second half of last year.

25
00:01:15,640 --> 00:01:18,200
Speaker 3: Pal's remarks represent a shift and his message after a

26
00:01:18,280 --> 00:01:20,720
Speaker 3: third straight month in which a key measure of inflation

27
00:01:20,840 --> 00:01:26,199
Speaker 3: exceeded forecasts. Policymakers narrowly penciled in three interest rate cuts

28
00:01:26,240 --> 00:01:29,400
Speaker 3: and forecasts published last month, but investors are now betting

29
00:01:29,400 --> 00:01:31,520
Speaker 3: on just one to two cuts this year.

30
00:01:32,400 --> 00:01:34,920
Speaker 1: As for the Bank of England Governor Andrew Bailey, he

31
00:01:35,000 --> 00:01:38,120
Speaker 1: says that Britain is on a different inflation path to

32
00:01:38,200 --> 00:01:41,560
Speaker 1: the US. The comments imply that the Bank of England

33
00:01:41,680 --> 00:01:44,919
Speaker 1: might cut into est rates before the FED. Bailey says,

34
00:01:45,319 --> 00:01:48,000
Speaker 1: the US inflation is being led by demands.

35
00:01:48,880 --> 00:01:51,720
Speaker 5: I think the dynamics of inflation are rather different between

36
00:01:52,000 --> 00:01:55,760
Speaker 5: Europe and I mean you're geographically now and the US.

37
00:01:55,960 --> 00:02:00,800
Speaker 5: We're still seeing the extension of the process of coming

38
00:02:00,880 --> 00:02:03,680
Speaker 5: out of the big supply shocks that we had, the

39
00:02:03,680 --> 00:02:06,320
Speaker 5: impact of the war, the impact of coming out of COVID.

40
00:02:07,200 --> 00:02:10,560
Speaker 1: Bailey was speaking at the IMF Spring meetings in Washington,

41
00:02:11,040 --> 00:02:14,840
Speaker 1: In its latest economic outlook, the IMF predicted that AI

42
00:02:15,000 --> 00:02:17,799
Speaker 1: could boost the size of the UK economy by sixteen

43
00:02:17,919 --> 00:02:21,440
Speaker 1: percent in its first ten years of adoption, higher than

44
00:02:21,440 --> 00:02:22,400
Speaker 1: most other countries.

45
00:02:22,880 --> 00:02:25,120
Speaker 3: The chance of Jeremy hunt as the prospect of interest

46
00:02:25,200 --> 00:02:27,840
Speaker 3: rate CODs could lift the mood of voters and their

47
00:02:27,919 --> 00:02:30,480
Speaker 3: view of the Conservatives ahead of a general election. He

48
00:02:30,520 --> 00:02:33,360
Speaker 3: told Bloomberg. The economy will be in a better place

49
00:02:33,600 --> 00:02:34,799
Speaker 3: in the months ahead.

50
00:02:35,000 --> 00:02:38,079
Speaker 6: That situation we were in eighteen months ago with inflation

51
00:02:38,160 --> 00:02:39,760
Speaker 6: at eleven point one percent.

52
00:02:40,400 --> 00:02:41,919
Speaker 2: That is well and truly behind us.

53
00:02:42,000 --> 00:02:44,400
Speaker 6: We think we have very strong growth prospects, so a

54
00:02:44,440 --> 00:02:47,520
Speaker 6: feel good factor as interest rates start to come down,

55
00:02:47,800 --> 00:02:52,200
Speaker 6: as people start to feel higher, real disposable incomes will

56
00:02:52,200 --> 00:02:55,720
Speaker 6: be stronger in people's minds come the early autumn.

57
00:02:56,760 --> 00:02:59,480
Speaker 3: Hunts Carmen's backup speculation that the government is planning to

58
00:02:59,520 --> 00:03:02,400
Speaker 3: hold in a in the autumn. Markets are currently pricing

59
00:03:02,400 --> 00:03:04,320
Speaker 3: in a first reduction in the Bank of England's five

60
00:03:04,360 --> 00:03:06,600
Speaker 3: and a quarter percent rate in September.

61
00:03:07,480 --> 00:03:10,920
Speaker 1: The ECB president Christine Legarde has doubled down on the

62
00:03:10,919 --> 00:03:13,760
Speaker 1: message that she gave last week that the bank is

63
00:03:13,880 --> 00:03:17,000
Speaker 1: on a firm path to a first rate cut in June.

64
00:03:17,200 --> 00:03:20,200
Speaker 1: She told CNBC on Tuesday that as long as shocks

65
00:03:20,240 --> 00:03:24,400
Speaker 1: don't derail the slowdown in Eurozone inflation, it'll be time

66
00:03:24,480 --> 00:03:29,600
Speaker 1: to moderate the central Bank's restrictive stance in reasonably short order.

67
00:03:30,000 --> 00:03:32,920
Speaker 1: Legguard wouldn't comment on how many cuts in borrowing costs

68
00:03:32,960 --> 00:03:37,080
Speaker 1: so likely to materialize. Speaking in Washington, Leguard also highlighted

69
00:03:37,240 --> 00:03:40,040
Speaker 1: that the German economy may be starting to recover after

70
00:03:40,080 --> 00:03:42,600
Speaker 1: being rocked by a series of shocks in recent years.

71
00:03:43,200 --> 00:03:47,040
Speaker 3: Jamie Diamond has told Bloomberg that AI will transform banking,

72
00:03:47,160 --> 00:03:50,200
Speaker 3: but it will also lead to job losses. The JP

73
00:03:50,320 --> 00:03:53,320
Speaker 3: Morgan CEO's comments come after he devoted a chunk of

74
00:03:53,360 --> 00:03:57,360
Speaker 3: his annual shareholder letter to the importance of artificial intelligence

75
00:03:57,360 --> 00:04:00,840
Speaker 3: for the Wall Street Giants, business and for society at large,

76
00:04:01,200 --> 00:04:04,240
Speaker 3: likening its impact to that of the steam engine. Here's

77
00:04:04,240 --> 00:04:07,240
Speaker 3: what Diamond told Emily Chang on the latest episode of

78
00:04:07,320 --> 00:04:07,960
Speaker 3: The Circus.

79
00:04:08,360 --> 00:04:10,360
Speaker 7: But the way to think about for us is every

80
00:04:10,400 --> 00:04:15,800
Speaker 7: single process, so errors, trading, hedging, research, every app every database,

81
00:04:15,800 --> 00:04:17,839
Speaker 7: You're going to be applying AI. So it might be

82
00:04:17,880 --> 00:04:20,839
Speaker 7: as a copilot, it might be to replace humans. You know,

83
00:04:20,880 --> 00:04:23,000
Speaker 7: AI is doing all the equity hedging for us. For

84
00:04:23,040 --> 00:04:26,719
Speaker 7: the most part, it's idea generation, it's large language models.

85
00:04:26,960 --> 00:04:29,800
Speaker 7: It's no taking while you're talking to someone and while

86
00:04:29,800 --> 00:04:31,479
Speaker 7: it's taking notes and may actually say to you that,

87
00:04:31,520 --> 00:04:33,560
Speaker 7: you know, here's the thing of interest to Climbke Peterston

88
00:04:33,880 --> 00:04:36,599
Speaker 7: all error, all customer service is a little bit of everything.

89
00:04:36,640 --> 00:04:38,560
Speaker 8: But it is going to replace some jobs, of course.

90
00:04:38,640 --> 00:04:41,359
Speaker 7: Yeah, but I look, folks, people have to take a

91
00:04:41,360 --> 00:04:45,000
Speaker 7: deep breath. Okay, Technologies always replaced jobs. Your children will

92
00:04:45,040 --> 00:04:47,920
Speaker 7: live to one hundred and not have cancer because of technology,

93
00:04:47,960 --> 00:04:49,960
Speaker 7: and literally they'll probably be working three and a half

94
00:04:50,040 --> 00:04:50,640
Speaker 7: days a week.

95
00:04:52,000 --> 00:04:54,040
Speaker 3: And you can watch the full interview with Jamie Diamond

96
00:04:54,080 --> 00:04:56,279
Speaker 3: on the latest episode of The Circus with Emily Chang

97
00:04:56,320 --> 00:04:59,000
Speaker 3: on Bloomberg. Original is available on the app or YouTube

98
00:04:59,080 --> 00:05:00,400
Speaker 3: or as a podcast.

99
00:05:00,920 --> 00:05:05,680
Speaker 1: Now to some earnings, growth is stalling below expectations at

100
00:05:05,920 --> 00:05:10,520
Speaker 1: LVMH's consumers railing spending on high end goods. Organic growth

101
00:05:10,560 --> 00:05:13,280
Speaker 1: at the company's biggest division, that is its fashion and

102
00:05:13,400 --> 00:05:17,800
Speaker 1: leather goods unit, fell sixteen percent compared to twenty twenty four.

103
00:05:17,839 --> 00:05:22,760
Speaker 1: Bloommegg's Opinions luxury writer Andrew Felstad says that circumstances this

104
00:05:22,920 --> 00:05:24,520
Speaker 1: year are very different.

105
00:05:24,480 --> 00:05:28,640
Speaker 9: Now this time last year first quarter twenty three, both

106
00:05:28,680 --> 00:05:32,440
Speaker 9: of those were in the high teens and they were

107
00:05:32,560 --> 00:05:35,960
Speaker 9: about double what analysts expected. Now we're up against very

108
00:05:36,640 --> 00:05:41,280
Speaker 9: strong comparisons because this time last year, China was just reopening,

109
00:05:41,640 --> 00:05:44,280
Speaker 9: the US was starting to slow, but it hadn't really

110
00:05:44,320 --> 00:05:44,920
Speaker 9: turned down.

111
00:05:46,279 --> 00:05:49,680
Speaker 1: So that was bloombgg's Andrea Felsted speaking there. This is

112
00:05:49,800 --> 00:05:53,800
Speaker 1: the slowest first quarter for the retailer since twenty sixteen,

113
00:05:53,920 --> 00:05:58,520
Speaker 1: excluding the twenty twenty COVID period. LVMH's wine and Spirit's

114
00:05:58,560 --> 00:06:02,880
Speaker 1: divisions struggled with all revenue down twelve percent, while selective

115
00:06:02,960 --> 00:06:07,360
Speaker 1: retailing performed the best, led by its beauty retailer Sephora.

116
00:06:08,000 --> 00:06:10,360
Speaker 3: To some breaking news this aeron, the Dutch equipment maker

117
00:06:10,400 --> 00:06:14,960
Speaker 3: ASML has reported first quarter bookings that missed expectations. The

118
00:06:15,000 --> 00:06:18,039
Speaker 3: figure came in at three point six one billion euros

119
00:06:18,120 --> 00:06:22,279
Speaker 3: versus an expected four point sixty three billion. Other company

120
00:06:22,360 --> 00:06:26,040
Speaker 3: still sees its total net sales in twenty twenty four

121
00:06:26,160 --> 00:06:29,320
Speaker 3: to be similar to twenty twenty three. It's also expecting

122
00:06:29,320 --> 00:06:32,640
Speaker 3: a stronger second half to this year than the first half.

123
00:06:32,760 --> 00:06:36,839
Speaker 3: This as it confirms its midterm goals as it presented

124
00:06:37,000 --> 00:06:38,600
Speaker 3: in twenty twenty two.

125
00:06:39,800 --> 00:06:42,680
Speaker 1: The United States is set to place sanctions on Iran's

126
00:06:42,760 --> 00:06:46,279
Speaker 1: drone program after the country's attack on Israel. According to

127
00:06:46,360 --> 00:06:50,159
Speaker 1: the White House's National Security Advisor Jake Sullivan, Washington is

128
00:06:50,200 --> 00:06:55,760
Speaker 1: coordinating a comprehensive response alongside G seven countries. The US

129
00:06:55,800 --> 00:06:58,200
Speaker 1: Sector of State Janet Yellen, says that the measures will

130
00:06:58,200 --> 00:06:59,400
Speaker 1: come into play shortly.

131
00:07:00,080 --> 00:07:05,000
Speaker 8: Fully expect that we will take additional sanctions action against

132
00:07:05,040 --> 00:07:11,280
Speaker 8: Iran in the coming days. We don't preview our sanctions tools,

133
00:07:11,800 --> 00:07:18,160
Speaker 8: but in discussions I've fed all options to disrupt terrorist

134
00:07:18,280 --> 00:07:23,160
Speaker 8: financing of Iran continue to be on the table.

135
00:07:24,160 --> 00:07:27,640
Speaker 1: Janet Yellen speaking there. The US will also announce sanctions

136
00:07:27,640 --> 00:07:32,280
Speaker 1: against entities supporting the Islamic Revolutionary Guard Corps and Iran's

137
00:07:32,280 --> 00:07:36,560
Speaker 1: Defense Ministry, and expects allies to follow. Now in a moment,

138
00:07:36,560 --> 00:07:39,680
Speaker 1: we're going to dig into the world's top central bankers

139
00:07:39,760 --> 00:07:43,520
Speaker 1: who have been talking at the IMF and World Banker

140
00:07:43,600 --> 00:07:46,520
Speaker 1: meetings in Washington, and the major changes we've seen as

141
00:07:46,520 --> 00:07:49,400
Speaker 1: a result in markets. Plus also will bring you Blue

142
00:07:49,440 --> 00:07:52,560
Speaker 1: Begg's interview with the UK Chanceor Jeremy Hunt that in

143
00:07:52,760 --> 00:07:55,960
Speaker 1: just a moment. But another story that caughta Have you

144
00:07:56,000 --> 00:07:59,120
Speaker 1: seen all of the pictures the torrential reign. It's not

145
00:07:59,240 --> 00:08:01,920
Speaker 1: here in London, it's in Dubai.

146
00:08:02,120 --> 00:08:04,520
Speaker 3: Yeah, perhaps unexpected this time of the year, but it's

147
00:08:04,560 --> 00:08:07,280
Speaker 3: disrupted flights, schools have been shot, traffics and brought to

148
00:08:07,320 --> 00:08:10,640
Speaker 3: a standstill. In fact, the authorities into the UA recommending

149
00:08:10,680 --> 00:08:13,760
Speaker 3: people work from home today because it's been such a

150
00:08:13,800 --> 00:08:17,360
Speaker 3: disruption to the area. But this is after UA authorities

151
00:08:17,360 --> 00:08:20,480
Speaker 3: carried out a cloud seeding operation on Monday and Tuesday

152
00:08:20,760 --> 00:08:23,560
Speaker 3: to help create or at least augment the rainfall that

153
00:08:23,640 --> 00:08:25,200
Speaker 3: was in the clouds. And this is a practice they've

154
00:08:25,200 --> 00:08:27,640
Speaker 3: been undertaking since two thousand and two. They basically send

155
00:08:27,680 --> 00:08:31,480
Speaker 3: planes into the clouds, then plant chemicals and particles into

156
00:08:31,480 --> 00:08:34,440
Speaker 3: the atmosphere to coax more rain from the clouds. It's

157
00:08:34,440 --> 00:08:37,800
Speaker 3: meant to try and help with the water security issues

158
00:08:38,280 --> 00:08:41,040
Speaker 3: in Dubai. Now they've actually the media office actually in

159
00:08:41,080 --> 00:08:44,440
Speaker 3: the emirate dubbing the downpours rains of goodness, despite the

160
00:08:44,440 --> 00:08:46,160
Speaker 3: fact that people's homes have been flooded.

161
00:08:46,400 --> 00:08:49,400
Speaker 1: So yeah, I saw lots of images of luxury cars

162
00:08:49,440 --> 00:08:54,000
Speaker 1: being stuck in enormous torrential rain. But yes, it's interesting

163
00:08:54,040 --> 00:08:57,959
Speaker 1: though that it's actually more about kind of the weather.

164
00:08:58,200 --> 00:09:02,120
Speaker 1: And yeah, I suppose the infrastructure to buy than anything

165
00:09:02,120 --> 00:09:03,720
Speaker 1: else that's in part man made.

166
00:09:03,920 --> 00:09:07,880
Speaker 3: Yeah, it's certainly very interesting to see the effects that's

167
00:09:07,920 --> 00:09:10,199
Speaker 3: having on, particularly the airport in Dubaio, which is still

168
00:09:10,240 --> 00:09:12,080
Speaker 3: warning of some more disruption to come there too.

169
00:09:13,400 --> 00:09:16,040
Speaker 1: Okay, it's been a very busy week for central bankers

170
00:09:16,080 --> 00:09:18,480
Speaker 1: attending the IMF and World Bank meetings in Washington. The

171
00:09:18,520 --> 00:09:21,079
Speaker 1: Defense jer Own Powell is among them. He has signaled

172
00:09:21,080 --> 00:09:25,560
Speaker 1: that policymakers will wait longer than previously thought before cutting

173
00:09:25,640 --> 00:09:28,920
Speaker 1: interest rates. TVNCA pretty good to join this now for

174
00:09:29,000 --> 00:09:30,880
Speaker 1: more on this. Good to have you with us, Critty.

175
00:09:31,000 --> 00:09:35,320
Speaker 1: How significant a shift in language is this from Jerome Powell.

176
00:09:35,480 --> 00:09:38,400
Speaker 10: This is a pretty big shift of language, specifically when

177
00:09:38,440 --> 00:09:41,760
Speaker 10: he's kind of admitting that the work isn't fully done

178
00:09:41,800 --> 00:09:44,040
Speaker 10: on inflation. And this is in contrast to what he

179
00:09:44,080 --> 00:09:47,520
Speaker 10: said in prior iterations, which is that progress is being made,

180
00:09:47,520 --> 00:09:49,719
Speaker 10: that these kind of previous hot data prints that we've

181
00:09:49,720 --> 00:09:52,400
Speaker 10: seen in January or in February in the States are

182
00:09:52,440 --> 00:09:55,319
Speaker 10: perhaps one offs. It is he loves to say transitory

183
00:09:55,400 --> 00:09:57,880
Speaker 10: for example, so he say that this even uptick wasn't

184
00:09:57,880 --> 00:10:00,599
Speaker 10: something to be concerned about until now, and this is

185
00:10:00,720 --> 00:10:02,960
Speaker 10: rarely where you're starting to see the bond market really

186
00:10:03,000 --> 00:10:05,960
Speaker 10: react the comments where he specifically says that it's going

187
00:10:06,040 --> 00:10:09,679
Speaker 10: to likely take longer for confidence on inflation and that

188
00:10:09,800 --> 00:10:12,760
Speaker 10: recent data shows that lack of further progress. As you mentioned, Caroline,

189
00:10:12,800 --> 00:10:16,280
Speaker 10: this idea here simply that not only is the higher

190
00:10:16,280 --> 00:10:18,800
Speaker 10: for longer regime still at play, but rate cuts are

191
00:10:18,880 --> 00:10:21,160
Speaker 10: going to get pushed out further and further. And you've

192
00:10:21,160 --> 00:10:23,360
Speaker 10: already seen that in the bond market for sixty six

193
00:10:23,640 --> 00:10:24,800
Speaker 10: on the US ten yure this morning.

194
00:10:25,120 --> 00:10:27,040
Speaker 3: Yeah, and indeed the two year push about five percent

195
00:10:27,080 --> 00:10:29,679
Speaker 3: briefly after these comments as well. I mean, how are

196
00:10:29,760 --> 00:10:30,760
Speaker 3: markets taking this?

197
00:10:31,240 --> 00:10:34,480
Speaker 10: Not well clearly, And one of the concerns here is

198
00:10:34,559 --> 00:10:36,480
Speaker 10: less about the bond market, which we've kind of have

199
00:10:36,880 --> 00:10:39,320
Speaker 10: a forming consensus of in the last couple of weeks

200
00:10:39,480 --> 00:10:42,000
Speaker 10: slash months, that five percent yields are probably going to

201
00:10:42,120 --> 00:10:44,360
Speaker 10: arrive on at least a ten year benchmark in the

202
00:10:44,520 --> 00:10:47,960
Speaker 10: US before coming back down to kind of below four percent.

203
00:10:48,040 --> 00:10:51,240
Speaker 10: That was a big contrarian take last quarter. This quarter

204
00:10:51,320 --> 00:10:53,360
Speaker 10: seems to be what everyone is kind of growing around.

205
00:10:53,520 --> 00:10:55,880
Speaker 10: The bigger concern is the ripple effects here, because remember

206
00:10:55,920 --> 00:10:59,800
Speaker 10: the FX market has been fairly sanguine. People are positioned

207
00:11:00,080 --> 00:11:03,840
Speaker 10: long dollar. You haven't yet seen European currencies like the Euro,

208
00:11:04,120 --> 00:11:06,280
Speaker 10: like the pound really crack and the first kind of

209
00:11:06,320 --> 00:11:08,199
Speaker 10: line of a fence off this yield move and the

210
00:11:08,280 --> 00:11:11,440
Speaker 10: ripple effect is showing up in Asian currencies. We're already

211
00:11:11,480 --> 00:11:14,600
Speaker 10: having speakers come out from the BOJ from the Bank

212
00:11:14,600 --> 00:11:17,680
Speaker 10: of Korea as well, really concerned about that currency story.

213
00:11:17,720 --> 00:11:19,600
Speaker 10: Then you look at the stock market. Our five percent

214
00:11:19,679 --> 00:11:21,439
Speaker 10: yield not on the two year, but on the tenure

215
00:11:21,720 --> 00:11:24,400
Speaker 10: going to trigger some sort of sell off in the

216
00:11:24,400 --> 00:11:27,280
Speaker 10: broader stock market that accelerates the carnage you're already seeing.

217
00:11:27,720 --> 00:11:31,880
Speaker 1: Yeah. Meanwhile, other central banks have also been speaking at

218
00:11:31,920 --> 00:11:35,520
Speaker 1: these meetings and in a way sort of reacting. Andrew

219
00:11:35,520 --> 00:11:38,600
Speaker 1: Bailey of the Bank of England suggesting that the UK

220
00:11:38,679 --> 00:11:41,360
Speaker 1: could cut rates before the FED a vote of confidence.

221
00:11:41,440 --> 00:11:44,640
Speaker 1: Maybe the inflation in the UK and the trajectory here

222
00:11:44,800 --> 00:11:47,920
Speaker 1: is different and more confident about it in Britain.

223
00:11:48,440 --> 00:11:52,160
Speaker 10: It's a careful narrative to play with because and you

224
00:11:52,200 --> 00:11:56,040
Speaker 10: can hear contestancy in your voice as well. But the

225
00:11:56,440 --> 00:11:59,040
Speaker 10: resilience and inflation can be viewed in two ways. One

226
00:11:59,080 --> 00:12:01,480
Speaker 10: can be a result of supply chain shocks, which is

227
00:12:01,480 --> 00:12:04,079
Speaker 10: not necessarily a healthy part of the economy. The other

228
00:12:04,080 --> 00:12:06,480
Speaker 10: piece can be consumer resilience. A third piece can be

229
00:12:06,760 --> 00:12:09,440
Speaker 10: structural issues within a given economy. You're seeing that in Germany,

230
00:12:09,480 --> 00:12:12,520
Speaker 10: for example, or there is that persistent inflation, but some

231
00:12:12,600 --> 00:12:15,280
Speaker 10: of the kind of tackling of it ends up meaning

232
00:12:15,600 --> 00:12:18,679
Speaker 10: a weaker economic structure. It's a similar story right here

233
00:12:18,679 --> 00:12:20,320
Speaker 10: in the UK where you do start to see some

234
00:12:20,360 --> 00:12:23,199
Speaker 10: of the kind of more sticky parts of the economy

235
00:12:23,480 --> 00:12:26,960
Speaker 10: not being able to digest any sort of persistently higher

236
00:12:26,960 --> 00:12:29,640
Speaker 10: for longer story. So rate cuts can be insurance the

237
00:12:29,679 --> 00:12:31,439
Speaker 10: way that the US is kind of thinking about it

238
00:12:31,440 --> 00:12:33,800
Speaker 10: as some sort of normalization of rates, or they can

239
00:12:33,840 --> 00:12:36,360
Speaker 10: be a tool used to provide a little bit of

240
00:12:36,400 --> 00:12:39,480
Speaker 10: cushion for average consumers. And it kind of feels like

241
00:12:39,520 --> 00:12:42,679
Speaker 10: the UK is leaning towards the latter rather than the former.

242
00:12:42,679 --> 00:12:45,000
Speaker 10: And that's why Andrew Bailey's comments should be marked as

243
00:12:45,040 --> 00:12:48,440
Speaker 10: different than the federal reserves as a poise to the BOE.

244
00:12:48,600 --> 00:12:50,280
Speaker 10: Did a job all done?

245
00:12:50,640 --> 00:12:53,040
Speaker 3: Okay, Christy Gupta, thank you very much for joining us

246
00:12:53,160 --> 00:12:56,040
Speaker 3: this morning with talking us through some of the central

247
00:12:56,080 --> 00:12:58,920
Speaker 3: bank comments they're happening at the IMF and World Bank

248
00:12:58,920 --> 00:13:00,000
Speaker 3: Spring meetings in Washington.

249
00:13:00,520 --> 00:13:02,880
Speaker 1: Well, speaking of Washington, of course, we've got a big

250
00:13:02,880 --> 00:13:06,040
Speaker 1: interview for you this morning. The Chancellor, Jeremy Hunt, has

251
00:13:06,080 --> 00:13:10,520
Speaker 1: told Bloomberg that interest rate cuts would lift voter's mood

252
00:13:10,920 --> 00:13:14,400
Speaker 1: ahead of the general election. His comments add to speculation

253
00:13:14,480 --> 00:13:18,040
Speaker 1: that the Prime Minister won't call a vote until the autumn.

254
00:13:18,240 --> 00:13:21,880
Speaker 1: Jeremy Hunt has been speaking to Bloombo's Candy Lines in Washington.

255
00:13:22,280 --> 00:13:25,240
Speaker 6: I think the big message from today is that the

256
00:13:25,280 --> 00:13:27,480
Speaker 6: IMF is saying that inflation is going to be one

257
00:13:27,559 --> 00:13:30,880
Speaker 6: point two percent lower. There are people who are now

258
00:13:30,920 --> 00:13:34,280
Speaker 6: forecasting inflation will be lower in the UK than in

259
00:13:34,320 --> 00:13:38,240
Speaker 6: the US or possibly even the Eurozone. And so you

260
00:13:38,280 --> 00:13:41,480
Speaker 6: know that situation we're in eighteen months ago with inflation

261
00:13:41,600 --> 00:13:44,760
Speaker 6: at eleven point one percent, that is well and truly

262
00:13:44,800 --> 00:13:47,760
Speaker 6: behind us. And if you're looking forward in terms of

263
00:13:47,960 --> 00:13:51,360
Speaker 6: longer term growth prospects, the IMF today are saying that

264
00:13:51,400 --> 00:13:54,400
Speaker 6: the UK will grow faster than France, Germany or Italy

265
00:13:54,800 --> 00:13:56,040
Speaker 6: over the next six years.

266
00:13:56,520 --> 00:13:58,640
Speaker 2: So we think we have very strong growth.

267
00:13:58,400 --> 00:14:01,240
Speaker 11: Prospects, So you aren't controunded at all about what potentially could

268
00:14:01,320 --> 00:14:03,959
Speaker 11: happen two parts of the UK economy, like the labor

269
00:14:04,000 --> 00:14:06,520
Speaker 11: market if policy were to take stay too tight for

270
00:14:06,559 --> 00:14:08,360
Speaker 11: too much longer, given what you are saying as a

271
00:14:08,360 --> 00:14:09,720
Speaker 11: downward trajectory in inflation.

272
00:14:10,480 --> 00:14:13,280
Speaker 6: Well, obviously in the short term we looked at the

273
00:14:13,280 --> 00:14:16,840
Speaker 6: Bank of England to get that fine judgment right. But

274
00:14:17,240 --> 00:14:20,880
Speaker 6: what finance ministers like me can do is much more

275
00:14:20,880 --> 00:14:23,760
Speaker 6: about the longer term competitiveness.

276
00:14:22,920 --> 00:14:24,080
Speaker 2: Of the UK economy.

277
00:14:24,160 --> 00:14:27,680
Speaker 6: And we note that the IMF today say there's a

278
00:14:27,680 --> 00:14:31,440
Speaker 6: whole section about the impact of AI on the UK

279
00:14:31,600 --> 00:14:35,680
Speaker 6: economy because they recognize that London is now the world's

280
00:14:35,720 --> 00:14:40,600
Speaker 6: second largest epicenter for AI, R and D after San Francisco,

281
00:14:41,080 --> 00:14:43,280
Speaker 6: and there's a huge amount happening in our tech economy,

282
00:14:43,280 --> 00:14:47,280
Speaker 6: which is third only to the US and China globally,

283
00:14:47,400 --> 00:14:50,640
Speaker 6: and that is really where the big growth in the

284
00:14:50,640 --> 00:14:52,480
Speaker 6: future is going to come in the UK, and that's

285
00:14:52,480 --> 00:14:55,440
Speaker 6: where we think makes the very exciting bet for investors.

286
00:14:55,640 --> 00:14:57,640
Speaker 11: Well, and your point has taken, Chancellor, that you oversee

287
00:14:57,640 --> 00:14:59,760
Speaker 11: the fiscal side, not the monetary side. So on the

288
00:14:59,760 --> 00:15:02,720
Speaker 11: fifth side, you have suggested that an election could happen

289
00:15:02,760 --> 00:15:06,680
Speaker 11: potentially as soon as October. Should we expect another potential

290
00:15:06,720 --> 00:15:09,680
Speaker 11: fiscal event between now and then, or have we seen

291
00:15:09,720 --> 00:15:12,120
Speaker 11: all we're going to see on that front before the

292
00:15:12,160 --> 00:15:12,840
Speaker 11: votes are cast.

293
00:15:13,280 --> 00:15:16,200
Speaker 6: Well, it's certainly the case that, you know, the feel

294
00:15:16,200 --> 00:15:19,480
Speaker 6: good factor, as interest rates start to come down, as

295
00:15:19,560 --> 00:15:23,760
Speaker 6: people start to feel higher real disposable incomes, we'll be

296
00:15:23,800 --> 00:15:27,600
Speaker 6: stronger in people's minds come the early autumn than it

297
00:15:27,640 --> 00:15:31,160
Speaker 6: is now. People have been through a very bruising period. Obviously,

298
00:15:31,160 --> 00:15:33,760
Speaker 6: decisions about election timing are for the Prime Minister, and

299
00:15:34,440 --> 00:15:37,360
Speaker 6: were we to have an October election, as I've said before,

300
00:15:37,360 --> 00:15:39,960
Speaker 6: it would be possible to have a fiscal event in September,

301
00:15:40,400 --> 00:15:43,720
Speaker 6: but we would decide much nearer the time whether that

302
00:15:43,840 --> 00:15:45,120
Speaker 6: was the right thing to do well.

303
00:15:45,160 --> 00:15:47,280
Speaker 11: Of course, you've already delivered a lot fiscally in terms

304
00:15:47,280 --> 00:15:50,440
Speaker 11: of tax cuts, including personal tax cuts, and yet when

305
00:15:50,440 --> 00:15:52,960
Speaker 11: you look at polls, obviously the Conservative Party is still

306
00:15:53,040 --> 00:15:56,960
Speaker 11: running significantly behind Labor I believe by roughly twenty points.

307
00:15:57,120 --> 00:15:58,840
Speaker 11: What else may need to be done on that front

308
00:15:59,000 --> 00:16:02,520
Speaker 11: to convince you voters to keep the Conservatives in power?

309
00:16:02,560 --> 00:16:04,400
Speaker 11: What would you consider doing well?

310
00:16:04,440 --> 00:16:05,040
Speaker 2: I'd be very.

311
00:16:04,920 --> 00:16:08,840
Speaker 6: Cautious about looking at those polls because, first of all,

312
00:16:09,280 --> 00:16:12,560
Speaker 6: as we can see from the challenges facing incumbent governments

313
00:16:12,560 --> 00:16:16,320
Speaker 6: not just in the UK but in the US and Germany, France,

314
00:16:17,120 --> 00:16:20,560
Speaker 6: the electorate have been through a really difficult period with

315
00:16:20,840 --> 00:16:26,240
Speaker 6: an energy shock, with high inflation, with a pandemic. But

316
00:16:26,400 --> 00:16:28,760
Speaker 6: when it comes to a general election, it's a choice

317
00:16:28,760 --> 00:16:30,880
Speaker 6: about the future. It's not a referendum on how you

318
00:16:30,880 --> 00:16:34,320
Speaker 6: feel right now, and that becomes a very different decision

319
00:16:34,360 --> 00:16:36,600
Speaker 6: in people's minds. And we know in the UK that

320
00:16:36,680 --> 00:16:39,240
Speaker 6: around a fifth of voters have not yet made up

321
00:16:39,240 --> 00:16:40,720
Speaker 6: their mind who they're going to vote for, So we

322
00:16:40,720 --> 00:16:42,120
Speaker 6: think there's all to play for.

323
00:16:42,240 --> 00:16:43,320
Speaker 2: And what we're seeing.

324
00:16:43,000 --> 00:16:46,800
Speaker 6: Now is much more positive data beginning to come through,

325
00:16:48,000 --> 00:16:50,920
Speaker 6: very good prospects for the UK going forward, as confirmed

326
00:16:50,920 --> 00:16:54,040
Speaker 6: by the IMF today, And I think all that means

327
00:16:54,040 --> 00:16:57,320
Speaker 6: that our strongest argument to the British people is going

328
00:16:57,360 --> 00:17:00,400
Speaker 6: to be that having turned that corner and want to

329
00:17:00,400 --> 00:17:02,880
Speaker 6: take any risks going forward that would mean that we

330
00:17:02,920 --> 00:17:04,800
Speaker 6: don't have that exciting economic growth.

331
00:17:05,040 --> 00:17:07,720
Speaker 11: Well, something else the IMF warned about in its report

332
00:17:07,760 --> 00:17:11,119
Speaker 11: today was around something you've just mentioned, the idea of

333
00:17:11,160 --> 00:17:15,159
Speaker 11: potentially an energy shock, considering we are still seeing hot wars,

334
00:17:15,200 --> 00:17:16,920
Speaker 11: not just on the continent of Europe, but of course

335
00:17:16,960 --> 00:17:18,959
Speaker 11: in the Middle East. We are waiting to see what

336
00:17:19,040 --> 00:17:21,480
Speaker 11: kind of retaliation we might see from the Israelis after

337
00:17:21,520 --> 00:17:24,439
Speaker 11: the Iranian attack over the weekend. How concerned are you

338
00:17:24,600 --> 00:17:27,679
Speaker 11: about the way in which this conflict may escalate and

339
00:17:27,720 --> 00:17:30,919
Speaker 11: the ramifications it could have, not just for humanity but

340
00:17:31,040 --> 00:17:32,359
Speaker 11: for the economy.

341
00:17:32,960 --> 00:17:35,200
Speaker 6: Well, I think we all have to be very concerned.

342
00:17:35,920 --> 00:17:38,480
Speaker 6: But I think we should also take comfort from the

343
00:17:38,520 --> 00:17:39,840
Speaker 6: fact that the.

344
00:17:39,840 --> 00:17:41,680
Speaker 2: Two biggest shocks that.

345
00:17:41,640 --> 00:17:44,320
Speaker 6: We've seen in the last few years, the invasion of

346
00:17:44,440 --> 00:17:47,880
Speaker 6: Ukraine and the attack on Israel, have both been met

347
00:17:47,920 --> 00:17:51,960
Speaker 6: by a very united response from Western allies, much more

348
00:17:52,040 --> 00:17:55,840
Speaker 6: united than our opponents were expecting. And I think that

349
00:17:56,080 --> 00:17:58,480
Speaker 6: what that demonstrates is that when the chips are down,

350
00:17:59,000 --> 00:18:01,840
Speaker 6: we recognize the seria business of the situation. We work

351
00:18:01,880 --> 00:18:04,639
Speaker 6: together with our friends and allies, and the relationship between

352
00:18:04,760 --> 00:18:08,040
Speaker 6: the UK and the US is right at the center

353
00:18:08,160 --> 00:18:11,119
Speaker 6: of that Western response to the challenges we face.

354
00:18:11,880 --> 00:18:14,439
Speaker 11: Given that there are these still ongoing conflicts, would you

355
00:18:14,440 --> 00:18:18,479
Speaker 11: ever give consideration to raising defense spending or is your

356
00:18:18,480 --> 00:18:21,720
Speaker 11: focus really primarily on delivering tax cuts, and that has

357
00:18:21,760 --> 00:18:22,400
Speaker 11: to factor in.

358
00:18:22,920 --> 00:18:23,120
Speaker 2: Well.

359
00:18:23,119 --> 00:18:26,840
Speaker 6: I think it's possible to do both because tax cuts

360
00:18:26,880 --> 00:18:29,280
Speaker 6: can help grow the economy. That means you have more

361
00:18:29,320 --> 00:18:33,879
Speaker 6: resources for really important challenges like security. And what I

362
00:18:33,880 --> 00:18:37,399
Speaker 6: would say is that you know, the UK recognizes with

363
00:18:37,480 --> 00:18:41,040
Speaker 6: the biggest spender on defense in Europe, we recognize they're

364
00:18:41,040 --> 00:18:43,639
Speaker 6: going forward, we're likely to have to spend more. But

365
00:18:43,760 --> 00:18:46,760
Speaker 6: part of our job is also to persuade other NATO

366
00:18:46,840 --> 00:18:52,439
Speaker 6: European countries that they need to spend their proper amount.

367
00:18:53,040 --> 00:18:56,320
Speaker 6: We can't just depend on the United States to defend Europe.

368
00:18:56,359 --> 00:18:57,840
Speaker 2: We need to play our part well.

369
00:18:57,840 --> 00:19:00,199
Speaker 11: We've heard certainly a great deal of that messaging in

370
00:19:00,240 --> 00:19:02,840
Speaker 11: the US as well, where there has been a evolving

371
00:19:02,920 --> 00:19:07,920
Speaker 11: conversation as for funding for Ukraine, certainly on Capitol Hill

372
00:19:07,960 --> 00:19:09,800
Speaker 11: in Washington. It does seem that there will be a

373
00:19:09,880 --> 00:19:12,120
Speaker 11: legislative effort now that could hit the floor this week

374
00:19:12,160 --> 00:19:15,320
Speaker 11: that involves repot the idea of taking seized Russian assets

375
00:19:15,359 --> 00:19:18,720
Speaker 11: and using that to fund Ukraine's war effort. That's something

376
00:19:18,720 --> 00:19:21,080
Speaker 11: the US would like to pursue. Would you like to

377
00:19:21,080 --> 00:19:23,359
Speaker 11: see the UK pursue that? Would you pursue? Would you

378
00:19:23,359 --> 00:19:25,000
Speaker 11: ask your colleagues that you were going to see at

379
00:19:25,040 --> 00:19:27,800
Speaker 11: the IMF World Bank meetings down in Washington this week

380
00:19:27,880 --> 00:19:29,600
Speaker 11: to congregate around that idea.

381
00:19:29,720 --> 00:19:32,800
Speaker 6: Well, I think it's a very intriguing proposal. I'll be

382
00:19:32,920 --> 00:19:35,719
Speaker 6: meeting Secretary Yellen in the next couple of days and

383
00:19:35,760 --> 00:19:37,840
Speaker 6: I'll certainly be talking to her about it and getting

384
00:19:37,880 --> 00:19:40,440
Speaker 6: some more detail on that. But I think we should

385
00:19:40,480 --> 00:19:43,920
Speaker 6: be thinking about anything we possibly can to come.

386
00:19:43,760 --> 00:19:45,199
Speaker 2: To the support of Ukraine.

387
00:19:45,280 --> 00:19:49,560
Speaker 6: This is an absolutely existential battle, not just for Ukraine itself,

388
00:19:49,680 --> 00:19:53,680
Speaker 6: but for a global order in which you know, since

389
00:19:53,720 --> 00:19:57,520
Speaker 6: the Second World War, we have largely stopped large countries

390
00:19:57,600 --> 00:20:00,160
Speaker 6: thinking they can just invade their neighbors and get away

391
00:20:00,160 --> 00:20:04,000
Speaker 6: with it. And if we were to let Russia get

392
00:20:04,040 --> 00:20:07,679
Speaker 6: away with invading Ukraine, the ramifications would be huge, not

393
00:20:07,760 --> 00:20:10,159
Speaker 6: just in Europe but all over the world. So I

394
00:20:10,160 --> 00:20:12,320
Speaker 6: think this is a proposal we should look at very carefully.

395
00:20:13,280 --> 00:20:16,000
Speaker 3: This is Bloomberg Daybreak Europe, your morning brief on the

396
00:20:16,080 --> 00:20:19,120
Speaker 3: stories making news from London to Wall Street and beyond.

397
00:20:19,400 --> 00:20:22,600
Speaker 1: Look for us on your podcast feed every morning on Apple,

398
00:20:22,720 --> 00:20:23,560
Speaker 1: Spotify and