FTSE 100 LIVE: Inflation falls to 0.5% in second full month of coronavirus lockdowns

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13 shares, 88 points
FTSE 100 LIVE: Inflation falls to 0.5% in second full month of coronavirus lockdowns

London’s stock exchange is expected to rise by 0.3 percent when it opens later on, amid the Bank of England raising its asset purchase programme by at least £100bn this week to help financial markets stabilise during the period of huge government borrowing due to the pandemic.

The bank’s Monetary Policy Committee is expected to keep the benchmark rate unchanged at 0.1 percent, however it will extend its quantitative easing programme, according to the FT. The extra stimulus through an extension of QE is expected ahead of results of the BoE’s review of the possible introduction of negative interest rates later this year.It comes as the UK central bank cut interest rates from 0.75 per cent to 0.1 per cent earlier this year due to the pandemuc, and also announced a £200bn new programme of QE.

This has meant the Treasury wasa able to issue big quantities of government debt.

Since March, the BoE has bought £148bn of existing gilts, or government bonds, currently at a rate of almost £14bn a week and also bought £152bn of newly issued gilts.

This has helped ensure the private sector did not have to increase its holdings of gilts substantially.

The cost of government borrowing has fallen, with debt sold at an interest rate of 0.2 per cent for the 10-year bond on Tuesday.

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7.30am update: Experts comment on inflation

Andrea Olivari, co-founder at digital lender Selina Finance said: “The figures are unsurprising given the devastating effect the pandemic has had on the economy, but further lockdown relaxations and economic stimulus could start reversing this trend.

“There is hope that consumer demand could slowly return, especially as a result of this week’s reopening of the retail sector; however, the extent of this will likely be undermined by the restrictions still in place, as social distancing makes it very difficult for many businesses to operate effectively.”

This is Lucy Harley-McKeown taking over from Rachel Russell.

5.52am update: FTSE bosses recieve full pay again after pandemic wage cuts

Top bosses at UK companies including Foxtons, Persimmon, Severn Trent, Burberry and Bakkavor, are will start getting full pay again following the pandemic.

Housebuilder Persimmon is among the companies which has returned senior executives to full pay only a month after they volunteered to take a 20 percent cut.

Burberry and food manufacturer Bakkavor, also cut payouts to investors as a result of coronavirus.

Other companies, such as advertising group WPP, which is making job cuts, and Dunelm, which used the government’s furlough scheme, are still reviewing whether to reinstate full salaries.

Sarah Wilson, head of Minerva, the investor advisory group, told the FT: “Shareholders will take a harsh view on companies that are indulging in virtue signalling.

“Companies need to stand by their principles, and they will be judged particularly when things are tough for their staff and customers.”


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