Morning business news - September 4Thursday 04 September 2014 10.51
Two major central banks have their monthly rates meetings today. Tracker mortgage holders will be hoping for another cut to the already historic low ECB main rate of 0.15%. The Bank of England may be going in the other direction though.
John Finn, Managing Director of Treasury Solutions, said the Bank of England was unlikely to raise rates today, despite the break with unanimity last month when two policy committee members voted for a rates hike. "The markets have been debating whether they might hike before the end of the year or early next year. On balance, the feeling is that it will be next year," he said. He added that manufacturing and services data form the US and the UK indicated that the economies there were powering ahead, unlike that of the European economy which is going in the opposite direction.
"I don't think the ECB will cut rates today. Even if they were to bring rates to zero, it would have a marginal effect," John Finn said. "ECB President Mario Draghi is going to have to look at printing money. The idea is that if you get more money into the economy, people will borrow more and spend more." However, he points out that Mario Draghi tried that tactic with limited success in 2011. "In that case, the money flowed back to the banks rather than into the real economy. We see that from the SME sector where the availability of credit to SMEs has fallen from a peak of €140 billion in 2008 to €60 billion this July. That trend appears to be going further south," he concluded.
MORNING BRIEFS - Andy McCue is going to be Paddy Power's new chief executive. He will take over from Patrick Kennedy who announced that he was stepping down at the company's AGM last May. Mr McCue is currently MD of Retail for the UK and Ireland and he joined the bookmaker eight years ago. Patrick Kennedy announced in May that he was standing down.
*** Regulators in the US have finalised details on the amount and what kind of assets banks have to hold that can be quickly turned into cash in the even of another crisis. The idea of the new rules is to provide protection if such a scenario re-emerged. The Federal Reserve warned that the biggest banks in the US face a $100 billion shortfall in order to meet the new liquidity rules.
*** The Local Enterprise Offices - or LEOs - the entity that replaced the County and City Enterprise Boards are teaming up with Microfinance Ireland to offer a new type of loan support aimed at the small business community. Microfinance Ireland is a not for profit lender that was set up about two years ago. The new LEO Microfinance loan will offer loans of between €2,000 and €25,000 to small businesses at a reduced rate of interest - 7.5% as opposed to 8.5% on a standard loan rate with flexible repayment options.
*** Michael Bloomberg is on his way back to the helm of his media empire, despite claiming in the past that he was going to focus on giving away his $32 billion fortune to good causes. Bloomberg LP, the data and financial news company, was founded by the former New York City mayor in 1981. His long time friend Daniel Doctoroff is standing down as CEO at the end of the year.