FirstFT: Bank of England urged to spell out plans to curb inflation

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The Bank of England needs to provide a better justification for believing the rise in inflation is temporary, according to an influential parliamentary committee, which queried the need for continued quantitative easing.

The House of Lords economic affairs committee said today that the BoE had failed to justify its flagship QE policy — the practice by which central banks seek to stimulate spending by creating money and pumping it into the economy by purchasing assets.

Lord Michael Forsyth of Drumlean, chair of the economic affairs committee, said that the bank had “become addicted” to quantitative easing, using it as the “answer to all the country’s economic problems”.

The committee report also said that if the BoE “does not respond to the inflation threat sufficiently early, it may be substantially more difficult to curb later”.

“Just ask any youngster trying to buy a flat and they will tell you about the impact of QE” — Lord Michael Forsyth of Drumlean

Five more stories in the news

1. Morgan Stanley trading dip offset by deals and wealth unit The Wall Street bank became the latest US lender to report that higher fees from investment banking had helped to pick up some of the slack from a slowdown in trading as it posted an increase in revenues and profits for the second quarter.

2. Manchester City owner raises $650m City Football Group, the Abu Dhabi-controlled holding company that owns the English Premier League champions, has raised one of football’s biggest debt deals, as it seeks to step up investment in its international network of football clubs.

3. Israel’s Candiru sold states spyware The cyber warfare group weaponised vulnerabilities in Microsoft and Google products, allowing governments to hack more than 100 journalists, activists and political dissidents globally, new research has found.

4. Brexit’s £37.3bn divorce bill The UK has put the estimate of the financial settlement after it left the EU at £37.3bn, £3.5bn smaller than that published by Brussels last week. But British officials said that the difference reflected different financial methodologies, not a looming bust-up.

5. Democrats eye carbon border tax US lawmakers are drawing up plans for a tax on imports from carbon-polluting countries to help pay for a $3.5tn package in new government spending.

• Climate policy around the world: The US carbon border tax plan follows the EU’s bid to move towards zero emissions, the importance of which was underscored as Germany reels from deadly flooding linked to climate change.

Coronavirus digest

• Carmakers can expect a sharp upturn in chip supplies in the coming weeks, Taiwan Semiconductor Manufacturing Company said, signalling that a global shortage may have moved past its most crippling stage.

• Scientists are racing to find out what causes long Covid-19. The NHS Covid-19 app sent more than 500,000 alerts last week recommending that people self-isolate, a tenfold jump in a month.

• The big four supermarkets — Tesco, J Sainsbury, Asda and Wm Morrison — said they would encourage customers to wear face masks from Monday.

Robert Shrimsley wonders if ministers have really thought through vaccine passports. Is the hospitality industry about to hire a staff the size of the UK Border Force to ensure all may safely booze in Wetherspoons? Sign up for our Coronavirus Business Update newsletter for more Covid-19 news.

The day ahead

Zomato IPO subscription period closes Zomato’s offer, which closes today, includes a new share issue worth Rs90bn ($1.2bn), priced at Rs72-Rs76 per share. The Indian food delivery group is set to lead a wave of tech IPOs in the country this year.

Unesco World Heritage Committee annual session Unesco World Heritage Committee gathers in Fuzhou, China, to consider requests for additions to the World Heritage list.

What else we’re reading

A wild ride into the cryptosphere Frank Partnoy bought a virtual horse, raced him to riches (sort of) — and got a first-hand look at the delights and dangers of “non-fungible tokens”. His lesson? If you like trading collectibles, you’ll almost certainly enjoy trading NFTs. But be careful. Racing horses can be addictive, in any form.

• Opinion: Crypto asset companies face a stark choice: learn to live with regulators or endure their wrath, writes Adam Samson.

Russia’s rail ambitions State-run Russian Railways is investing $17bn over a decade as part of an ambitious plan that aims to carry not just passengers but also grab a larger slice of the billions of dollars worth of goods that are transported annually from Asia to Europe. But the country faces stiff competition: not least of all from China’s Belt and Road Initiative.

Andrew Lloyd Webber: ‘I don’t feel like a Conservative at the moment’ The multimillionaire composer should be in jail. Sort of. He promised that if the government did not allow his musical, Cinderella, to open at full capacity in June, he would go ahead anyway. To hell with the handcuffs. But with that and his £60m theatre restoration complete, why isn’t he happier?

Apple and Klarna are cutting up credit cards When Apple and Goldman Sachs explore a line of business, there is probably money in it. So the news that Apple, backed by Goldman, plans to add a “buy now, pay later” feature to Apple Pay shows that financial opportunity knocks, writes John Gapper. Buy now, pay later can be a clever innovation, if shoppers use it wisely.

A private members’ club throws open its doors to the public Twenty-six years and more than 119,000 members after Soho House launched, the company has 30 locations in 12 countries and secured a valuation of $2.8bn on Wednesday — without ever making a profit. The company hopes the $420m it raised through yesterday’s initial public offering will allow it to pay down debt and continue a breakneck expansion.

• Robert Armstrong chews over comments from Jay Powell, Federal Reserve chair, in the latest edition of his Unhedged newsletter. Sign up here.

Books

The Cult of We The Wall Street Journal’s Eliot Brown and Maureen Farrell retell the story of excess at office-leasing group WeWork and its charismatic co-founder Adam Neumann.