Now the bank must cut rates: Bailey must lead the way, as he did at the start of Covid, says ALEX BRUMMER

The Bank of England is not among the regulators, including the Competition and Markets Authority and Ofcom, invited by the Chancellor of the Exchequer for a reminder of their growth mandate enshrined in law in 2017.

Perhaps Rachel Reeves chose to whisper her belief in expansion to Governor Andrew Bailey on her way back from China as bond yields soared in the financial markets.

Reeves cannot be assumed to influence an independent central bank. Nothing could anger the vigilante league sooner.

But the Chancellor must know that nothing would deliver faster results in terms of output and confidence than a 4.75 percent cut in the bank rate in February and a stated path to much lower borrowing costs by the end of the year.

Lower official short-term rates could flatten the yield curve, provide immediate relief for borrowers on tracker and variable-rate mortgages, and ease pressure on businesses facing higher costs due to employers’ payroll tax hikes.

Before taking action, the Bank’s overly cautious Monetary Policy Committee waited for a lower trend in wage agreements – the public sector is not helping in that regard – and a moderation in service prices.

She should also keep in mind that monetary policy, in the form of interest rates and quantitative tightening (removing the stimulus built up during the pandemic and at the beginning of the war in Ukraine), takes time.

The unexpected fall in headline inflation to 2.5 percent in December offers an opening for the Bank. Consumer prices are doing better in Britain than in the US, where they rose 2.9 percent last month.

Core goods inflation in Britain fell and price increases for services fell from 5.01 percent to 4.73 percent.

This decline is no less valid because it was caused by a decline in airfares and the hospitality industry. Bailey needs to lead from the front, as he did at the start of Covid-19, and cut hard and fast.

Technical boosters

Currys boss Alex Baldock is one of the most effective voices exposing the extent of Labour’s missteps since taking office.

At the electronics specialist, the practical impact of the additional £32 million national insurance costs is that the British and Scandinavian retailer is moving IT jobs to India.

Baldock views the false promise of business rates reforms as ‘absurd’ and is actively lobbying against workplace changes that require colleagues to be guaranteed hours.

Rather than protecting workers’ rights, the proposed reforms will make it much more difficult to work on flexible contracts that allow Currys to employ students, semi-retired women, returning women and others.

Baldock’s story might be less palatable if he hadn’t done it. Currys is one of those firms that successfully defeated predator Elliott’s attempt to take the retailer out of the London market.

Instead of plummeting, Curry’s shares have nearly doubled in the past year, an amount that would have gone to opportunistic buyers rather than shareholders.

The shares are supported by a recovery in the Nordic countries, strong demand for mobile phones (which have taken a long time to recover) and booming computer sales and gaming.

Currys says it has captured 75 percent of the AI-enabled computer and mobile phone market in Britain.

Baldock has just returned from a research and buying trip to the US, during which he visited Nvidia and Microsoft, among others, to help secure the company’s technological lead.

Profits are rising and are expected to rise 31 percent on last year, from £145 million to £155 million, and there is a promise of a full-year dividend increase.

It’s been a long time since we’ve heard such optimism from a smaller number of electronics retailers.

Win guy

There may be rewards for not changing the head honcho. After 19 years at the helm, Jamie Dimon at JP Morgan has cemented his reputation as a banker who walks on water.

He has made a staggering profit of £48bn in 2024, up 18 per cent as trading and deal-making boosted the bottom line.

That’s more than the 2024 forecasts for all four of Britain’s biggest banks – HSBC, Barclays, NatWest and Lloyds – combined.