BBC News - Ed Balls: Bank of England independence should be curbed

Former shadow chancellor Ed Balls has called for the Bank of England's independence to be curbed in response to growing "popular discontent".

Since leaving frontline politics, Ed Balls has found fame on Strictly Come Dancing

In an academic paper, he said central banks could "sacrifice some political independence" without undermining their ability to do their job.

"We need a more nuanced approach to central bank independence in this brave new world," he added.

A former top Bank official said Mr Balls had raised "an important issue".

Andrew Sentance, who used to be on the Bank's Monetary Policy Committee, told the BBC's Today programme: "In the UK we have a model where the government sets a remit for the Bank of England, and the government could change that remit, and I think there is a case for looking again at that remit to say whether it's the right one in the circumstances we now face after the financial crisis."

Mr Balls' views came in a paper for Harvard University's Kennedy School, co-written with James Howat and Anna Stansbury.

'Better dialogue'

For his part, Mr Balls told the Today programme that in order to protect its operational independence, the Bank needed "more political support and accountability". To that end, he said, there should be a "systemic risk body", chaired by the chancellor, to oversee policy.

There needed to be "a better dialogue" between central banks and the government, while the government needed to support the economy better with more spending on infrastructure.

Mr Balls added that he disagreed with Prime Minister Theresa May's recent criticisms of low interest rates, which she said had benefited the rich and made savers poorer.

He said the low-rate policy had been "the only thing which stopped our economy sliding back into depression".

He added that the case for operational independence for central banks remained "as strong as it's ever been" and that it was "very worrying" to see Bank of England governor Mark Carney being attacked for his policies.

Reuters News - Yellen says Fed could raise interest rates 'relatively soon'

U.S. Federal Reserve Chair Janet Yellen speaks at ''The Elusive 'Great' Recovery: Causes and Implications for Future Business Cycle Dynamics'' conference hosted by the Federal Reserve Bank of Boston in Boston, Massachusetts, U.S., 

The Federal Reserve could raise U.S. interest rates "relatively soon" if economic data keeps pointing to an improving labor market and rising inflation, Fed Chair Janet Yellen said on Thursday in a clear hint the U.S. central bank could hike next month.

Yellen said Fed policymakers at their meeting earlier in November judged that the case for a rate hike had strengthened.

"Such an increase could well become appropriate relatively soon," Yellen said in prepared remarks that were her first public comments since the United States elected Republican Donald Trump to be the country's next president.

Yellen, who was to deliver the remarks to lawmakers at 10 a.m. on Thursday, said the economy appeared on track to grow moderately, which would help bring about full employment and push inflation up and toward the Fed's 2 percent target.

She said current interest rate policy is stimulating economic output but the economy still has "a bit more room to run."

She said at this point she feels there is only a small risk the Fed is behind the curve on inflation, warranting only a gradual increase in the federal funds rate.

(Reporting by Jason Lange and Howard Schneider; Editing by Chizu Nomiyama)

Bloomberg News - Photographer: Ty Wright/Bloomberg How Trump Can Make Money Off the Secret Service

When Donald Trump was mulling a run for the White House back in 2000, Fortune magazine reported that he had combined his political appearances with 10 paid speeches for motivational guru Tony Robbins, so he could earn money while assessing a candidacy. “It’s very possible that I could be the first presidential candidate to run and make money on it,” Trump told the magazine. The sentiment may prove prescient.

Electing a U.S. president who is also a billionaire can carry all sorts of novel complications. One, for example, is Donald Trump’s fleet of two airplanes and three helicopters (including a Sikorsky S-76 featured last year on a television segment called “Pimp My Chopper”).

When it comes to political campaigns, the U.S. Secret Service pays for agent travel, be it on aircraft, trains, boats or automobile. The campaigns of both Trump and Hillary Clinton have been paid a total of $5.45 million for flying agents around, according to the last tally available from the Federal Election Commission. Of that, $2.74 million was attributable to protecting Trump.

Unlike Clinton, Trump didn’t need to charter an airplane since he flew on his own jets.As a result, while the Secret Service chipped in for its share of what the Clinton campaign paid to charter a plane, when it came to Trump’s campaign, the federal agency effectively just paid him. 

For travel on Trump’s black-and-red Boeing 757 and Cessna Citation jet, the candidate’s aviation company TAG Air Inc. has raked in almost $6 million, Politico reported. These payments, Secret Service spokesman Joe Casey said, accord with FEC rules specifying that those traveling with a campaign—including the news media—must pay for their travel. 

Trump’s aircraft fleet is just a microcosm of the numerous potential conflicts his transition team must navigate, given the extent of the president-elect’s business interests. Once they take office, Trump, Vice President-elect Mike Pence and their wives will travel on U.S. military aircraft. What’s not clear is how their seven adult children, their spouses or any other relatives will travel if they are under federal protection. If they’re traveling with Trump or Pence, they’ll likely fly on Air Force One or Air Force Two. At other times, however, Trump’s children might fly on a private jet—potentially one Trump owns.

The Secret Service does not discuss the status of protection for specific people, Casey said. The law specifying the Service’s duties authorizes protection “for the immediate family members” of the president and vice president. Trump’s four oldest children live in New York; Pence has two adult daughters, and a son in the U.S. Marine Corps. Trump also has a 10-year-old son, Barron, who will live at the White House. First Lady Michelle Obama’s mother, for example, lived at the White House but did not have Secret Service protection unless she was with her daughter or granddaughters.

For any of the Trump or Pence clans assigned a protective detail due to safety risks—and the rancor of the 2016 vote could well produce many—Secret Service travel on a Trump-owned plane means the agency would need to reimburse the aircraft’s owner. In this case, the president.

“So then you have government money going into the pockets of the president and his children,” said Brett Kappel, a lawyer who specializes in political finance and ethics at Akerman LLP. The Trump transition team did not respond to email requests seeking comment. The Trump family has also hired private security guards, although it is unclear how Trump’s election will affect the extent of private security used. The Secret Service has assumed full authority for protecting the president-elect and vice-president elect, including a new no-fly zone the Federal Aviation Administration has established until Jan. 21 over Trump’s Manhattan residence.

And unlike the taxpayer funds used to reimburse political campaigns for travel, which the Secret Service reports to the FEC, its security travel costs for an elected official, visiting dignitary or other protectee, are part of its normal operating budget and not subject to disclosure. So the cost of flying agents on Trump planes after the election probably won’t be publicly disclosed.

“There’s a going to be a bunch of unique situations because of President Trump’s extensive business holdings,” Kappel said. “We’ve never had a president in the modern era that has had a situation like this.”

Justin Bachman justinbachman

BBC News - UK inflation rate fell to 0.9% in October

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UK inflation registered a surprise fall in October, although there were signs that the pressure on consumer prices is starting to build.

The Consumer Prices Index (CPI) slipped to 0.9%, from 1% in September, the Office for National Statistics said.

That was below the 1.1% predicted by economists, who said sterling's fall would push October's CPI higher.

However, the ONS said factory gate prices and the costs of raw materials rose much faster in October.

Goods leaving factories rose by 2.1%, faster than expected and the biggest increase since April 2012. And costs faced by producers for raw materials and oil showed a record monthly jump in October, up by 4.6%.

"After initially pushing up the prices of raw materials, the recent fall in the value of the pound is now starting to boost the price of goods leaving factories as well," ONS statistician Mike Prestwood said.

"However, aside from fuel, there is no clear evidence that these pressures have so far fed through to the prices in shops," he said.

But there is an expectation among economists that inflation is set to rise, fuelled by the fall in the value of sterling since the Brexit referendum in June, which has pushed up the cost of imports.

On Tuesday, Bank of England governor Mark Carney told the Treasury Committee that "the thinking now is that inflation is going to go above target... We see more inflation coming through in 2017-18, and then a tail in 2019."

Inflation has been below the Bank's 2% target for nearly three years. Last year it was zero, the lowest since comparable records began in 1950.

Interest rates

The pound has fallen about 16% against the dollar and about 11% against the euro since June.

Chris Williamson, chief economist at IHS Markit said that despite October's CPI fall, the trend over the coming months would be upwards as rising factory costs feed through to consumers.

"It's therefore likely to be only a matter of time before price hikes in retailers' supply chains start feeding through to the customer, as retailers seek to protect margins," he said.

"The concern is that consumers are driving the economy at the moment, and higher inflation is starting to eat into people's spending power, subduing consumer spending."

And Nick Dixon, investment director at Aegon, said the trajectory for interest rates was also upwards.

"While slowing price growth may have come as a surprise to the markets, the days of low interest rates are numbered," he said.

"We're likely to see hawkish calls intensify among Bank of England officials in coming months. Despite the sluggish pace of inflation, the next 12 months are likely to see interest rates rise faster and higher than expected."

Earlier this month, the Bank of England forecast that inflation would rise to about 2.7% by this time next year.

The Retail Prices Index (RPI) - a separate measure of inflation, which includes housing costs - was 2% in October, unchanged from September, the ONS said.

Earlier this month, the ONS announced that from March 2017, there would be a new measure of inflation that would include the cost of owning a home.

Reuters News - Under Trump, Israel can 'reset' Middle East, right-wing leader says

By Luke Baker | JERUSALEM

Donald Trump's election as the next U.S. president presents Israel with a unique opportunity to recast its Middle East policies, a far-right Israeli cabinet member and staunch opponent of Palestinian statehood, said on Monday.

Naftali Bennett, leader of the religious-nationalist Jewish Home party and a staunch proponent of Israeli settlement building, said it was now up to Prime Minister Benjamin Netanyahu to communicate to the U.S. administration and the world what he wanted and push for it.

Referring to his own past as a high-tech entrepreneur, Bennett said not making the goals clear would result in failure.

"The combination of changes in the United States, in Europe and in the region provide Israel with a unique opportunity to reset and rethink everything," Bennett, 44, told members of the Foreign Press Association.

"We have a chance to reset the structure across the Middle East. We have to seize that opportunity and act on it."

Relying on "old paths", he said, would be a mistake.

Bennett would not be drawn on what actions he thinks Netanyahu should take. But in the past, Bennett has called for the annexation of most of the West Bank, which the Palestinians want for a state together with Gaza and East Jerusalem.

Israel has occupied the West Bank and East Jerusalem since the 1967 Middle East war.

Netanyahu, who has a fractious relationship with President Barack Obama, has welcomed Trump's election, chatting with him by phone and posting a video on Facebook promoting the ties between the countries. Their wives have also spoken.

But he has also been cautious about over-playing the benefits of a Trump presidency, perhaps so as not to preempt whatever policies the president adopts and to avoid giving the impression that he expects something from the United States.

During the campaign, however, Trump made it clear he would support Israel in a number of critical areas, including moving the U.S. embassy from Tel Aviv to Jerusalem, all but enshrining Jerusalem as Israel's capital over international objections, and not applying pressure for talks with the Palestinians.

Jason Greenblatt, an adviser to Trump on the Middle East, has also said that Israeli settlements built on land the Palestinians want for their own state are not an obstacle to peace and that the two-state solution - the bedrock of international diplomacy for 20 years - is not working.

As a result, many Israeli politicians and analysts have concluded that a Trump presidency will be a boon for Israel. Palestinian officials are reluctantly drawing the same conclusion, and have urged the world to pay attention.

TWO-STATE SOLUTION

Immediately after Trump's victory, Bennett declared that the two-state solution - the idea of a Palestinian state side-by-side with Israel and at peace - was effectively dead.

"Trump's victory is an opportunity for Israel to immediately retract the notion of a Palestinian state," he said. "The era of a Palestinian state is over."

He wouldn't reiterate that point on Monday, but did say "it's no secret that I think the idea of setting up a Palestinian state in the heart of Israel is a mistake."

Netanyahu has said he supports a negotiated settlement that leads to a demilitarized Palestinian state. But he opposes any return to pre-1967 lines, which he says would be indefensible, and demands Palestinians recognize Israel as a Jewish state in any peace deal. Talks between the sides collapsed in 2014.

While Bennett and others may be excited at the prospect of Trump in the White House, it is possible some of his policy ideas will be toned down between now and taking office. Presidential candidates have in the past promised to move the U.S. embassy to Jerusalem and then reneged.

The other consideration for both Israel and the new U.S. administration is the risk of serious fallout from an overly pro-Israel policy. If it becomes clear that the two-state solution is definitively dead and that Israel's occupation of the West Bank will run forever, the chances of another Palestinian uprising, and wider unrest, will grow sharply.

Both Israel and the United States could find themselves at sharp odds with Sunni Arab partners in the region, such as Egypt, Saudi Arabia and Jordan. Israel likes to play up the improving ties it has with those countries, but that could quickly come to an end if it takes dramatic steps that sideline peace talks and kill any hope of a Palestinian state.

(Writing by Luke Baker; editing by Anna Willard)

BBC News - Pound recovers ground after US election

The news will bring some respite to businesses that import goods, and to holidaymakers buying foreign currency.

For the first time in five weeks sterling is worth $1.26, having sunk as low as $1.21 a month ago. That is a rise of about 4%.

Against the euro, the pound has risen by more than 6% over the same period, up from €1.09 to €1.16.

It jumped further when figures on the construction industry were published, which were not as bad as expected.

One analyst said the US election had put concerns about Brexit "on the back burner".

Donald Trump's election as US President has also raised hopes that the UK may find it easier to negotiate a trade deal with the US.

'Trump phenomenon'

"This is definitely a rebound after some very positive comments from President-elect Trump," said Rupert Lee-Browne, chief executive of currency firm Caxton FX.

"He's indicated he wants America and the UK to continue with the special relationship, and that has lifted spirits in the currency market."

At the same time there are worries about political stability in Europe. Italy is facing a referendum on constitutional reform, and France a presidential election in April next year.

The High Court decision to force a parliamentary vote on Article 50, which triggers the Brexit procedure, has also helped the pound recover.

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It eased concerns on the financial markets that the UK could exit the European Union without a good trade deal - a so-called "hard Brexit".

"There's an element of simply a shift in focus behind this," said Jason Lawler, market analyst at CMC Markets.

"The phenomenon of Donald Trump as US President-elect has put Brexit on the back-burner, allowing the pound to creep higher."

Inflation

The pound's recovery has happened in spite of speculation that US interest rates might rise when the Federal Reserve, the US central bank, holds its next meeting in December, a move likely to strengthen the dollar.

Equally well, higher inflation expectations in the UK mean that interest rates are more likely to rise here, making the pound more attractive.

"But there is always the worry about Brexit - and that could bring sterling down going forward," said Mr Lee-Browne.

Despite the slight recovery in recent days, the pound is still well below the levels it stood at a year ago when it was worth $1.52 and €1.42.

By Brian MilliganPersonal Finance reporter

Reuters News - Thousands of anti-Trump protesters take to streets of U.S. cities

An AT&T truck burns as protests riot in Oakland, California, U.S. following the election of Republican Donald Trump as President of the United States November 9, 2016. REUTERS/Noah Berger

By Timothy Mclaughlin and Alexander Besant | CHICAGO/NEW YORK

Demonstrators marched in cities across the United States on Wednesday to protest against Republican Donald Trump's surprise presidential election win, blasting his campaign rhetoric about immigrants, Muslims and other groups.

In New York, thousands filled streets in midtown Manhattan as they made their way to Trump Tower, Trump's gilded home on Fifth Avenue. Hundreds of others gathered at a Manhattan park and shouted "Not my president."

In Los Angeles, protesters sat on the 110 and 101 highway interchange, blocking traffic on one of the city's main arteries as police in riot gear tried to clear them. Some 13 protesters were arrested, a local CBS affiliate reported.

An earlier rally and march in Los Angeles drew more than 5,000 people, many of them high school and college students, local media reported.

A demonstration of more than 6,000 people blocked traffic in Oakland, California, police said. Protesters threw objects at police in riot gear, burned trash in the middle of an intersection, set off fireworks and smashed store front windows.

Police responded by throwing chemical irritants at the protesters, according to a Reuters witness.

Two officers were injured in Oakland and two police squad cars were damaged, Johnna Watson, spokeswoman for the Oakland Police Department told CNN.

In downtown Chicago, an estimated 1,800 people gathered outside the Trump International Hotel and Tower, chanting phrases like "No Trump! No KKK! No racist USA."

Chicago police closed roads in the area, impeding the demonstrators' path. There were no immediate reports of arrests or violence there.

"I'm just really terrified about what is happening in this country," said 22-year-old Adriana Rizzo in Chicago, who was holding a sign that read: "Enjoy your rights while you can."

In Seattle, police responded to a shooting with multiple victims near the scene of anti-Trump protests. Police said it was unrelated to the demonstrations.

Protesters railed against Trump's campaign pledge to build a wall along the border with Mexico to keep immigrants from entering the United States illegally.

Hundreds also gathered in Philadelphia, Boston and Portland, Oregon, on Wednesday evening. In Austin, the Texas capital, about 400 people marched through the streets, police said.

A representative of the Trump campaign did not respond immediately to requests for comment on the protests. Trump said in his victory speech he would be president for all Americans, saying: "It is time for us to come together as one united people."

Earlier this month, his campaign rejected the support of a Ku Klux Klan newspaper and said that "Mr. Trump and his campaign denounces hate in any form."

"DREAMERS" FEAR DEPORTATION

Earlier on Wednesday, some 1,500 students and teachers rallied in the courtyard of Berkeley High School, in a San Francisco Bay Area city known for its liberal politics, before marching toward the campus of the University of California, Berkeley.

Hundreds of high school and college students also walked out in protest in Seattle, Phoenix, Los Angeles and three other Bay Area cities - Oakland, Richmond and El Cerrito.

A predominantly Latino group of about 300 high school students walked out of classes on Wednesday in Los Angeles and marched to the steps of City Hall, where they held a brief but boisterous rally.

Chanting in Spanish "the people united will never be defeated," the group held signs with slogans such as "Not Supporting Racism, Not My President" and "Immigrants Make America Great."

Many of those students were members of the "Dreamers" generation, children whose parents entered the United States with them illegally, school officials said, and who fear deportation under a Trump administration.

"A child should not live in fear that they will be deported," said Stephanie Hipolito, one of the student organizers of the walkout. She said her parents were U.S. citizens.

There were no immediate reports of arrests or violence.

Wednesday's demonstrations followed a night of protests in the San Francisco area and elsewhere in the country in response to Trump's victory against heavily favored Democratic rival Hillary Clinton.

(Reporting by Noah Berger and Stephen Lam in Oakland, Timothy Mclaughlin in Chicago, Alexander Besant in New York, Curtis Skinner in Berkeley, California, Brendan O'Brien in Milwaukee and Dan Whitcomb in Los Angeles; Editing by Leslie Adler, Peter Cooney and Paul Tait)