Rate cut to near zero by the end of the year so keep an eye on the Quarterly Report that comes in november. The bank of england votes 90 to cut rates, no dissent on rates but dissent on qe and the Corporate Bond buying program. The bank of england cut rates to. 25 , they intend to buy Corporate Bonds as well. The majority of the mpc expect a rate cut to zero by the end of 90year, and they voted four the rate. Majority of mpc expects a rate cut to near zero by the end of the year. I do say that their Bond Buying Program could increase by 170 billion pounds as well. To sort of put a number on the Corporate Bond buying program, it is 10 billion pounds over the next 10 months. Byathan guilt 10 year down the cable rate dropping off as well. Upside risk to inflation, Downside Risk to growth, that is what you see in the forecast. The 27 thet 2017 forecast, downgrading the most ever on a single inflationary report. Side, they seen inlation at 1. 9 on at q3 2017 versus 1. 5 , and sees inflation at 2. 4 at a twoyear or threeyear horizon. It is an overshoot of the 2 inflation target. To 2. 5 , a new record low for bank rate and the bank of england. The Asset Purchase Program has been increased to 435 pounds from 385 billion pounds previously. Bank of england Monetary Policy meeting advisor, you have an idea of what the bank of england has done and a bit of a split on the Asset Purchase Program. If you were on the mpc, what would you have done . Surprised we heard no dissenters because we heard some dissenting voices before this decision. I am not very impressed because i think the mpc is trying to do something that goes beyond the is of Monetary Policy remus of Monetary Policy. It is not clear they are following their own inflation target. Monastery Monetary Policy is not designed to offset big political shocks. That has to be sorted out in the political system. Unfortunately mark carney jumped the gun and hinted in this direction. The mpc has sort of been backed into a corner on this. I do not think it is necessarily the right decision. Jonathan it appears the split was on rates and not on rates that the qa program. The bank of england downgraded to the most ever. We have this policy dilemma. You have unread upside risk to inflation, Downside Risk to growth. Is it the wrong thing to focus on output . Andrew we do not know that the Inflation Impact will be transitory because the shock of leaving the eu is the shock on the supply side potentially reducing investment. That is something that really needs to be factored into these forecasts. I think the main point i would make is that we are reaching the limits of what Monetary Policy can do. At some point, central bankers need to turn around and say, we have done enough. We are not the fire brigade, we do not put out all the fires. If i was on the mpc i would have been arguing to wait for the autumn to see how the government responded, with the autumn statement, and other policy initiatives in order to set out the strategy for what our future negotiation is going to be with europe because that is ultimately the thing that is driving this loss of confidence, and the issue that needs to be addressed. Alix the boe is starting its Term Funding Scheme to impact lower rates, to get cheap loans out there to help households get money to spend. That is in some ways more important than getting businesses to spend because of brexit. What are some steps they can be taking to help facilitate household lending . Record lowhave had Mortgage Rates and Interest Rates and the u. K. For quite a period of time so they are johnng on a string as maynard keynes talked about. When Interest Rates get low you cannot really do much. I think there needs to be a degree of realism in the political system and the economic policymaking system about what Monetary Policy can do. The closer you get to this zero bounds of Interest Rates the more you get negative impacts on savers. In europe, and of Interest Rates have not created a very positive impact for their economy. I think the mpc is perhaps going a bit too far. Jonathan on the dissent specifically, kristin forbes, martin will propose the plan to expand the Asset Purchase Program. Talk to me what they are trying to achieve by corporate debt in the u. K. Kind of impact is that going to have on the market . Andrew i think those mpc members were right to oppose quantitative easing, or additional quantitative easing is that was effective when Financial Markets were very depressed in 2009. We have seen the stock market has recovered, bond yields are extremely low. Qa really only has an impact of pushing down bond yields, creating problems for Pension Funds and longterm savers. I guess those thoughts are in the minds of those mpc members, on Corporate Bonds i think the evidence is not there that we need to intervene in the Corporate Bond market. That is probably what is influencing Christian Forbes view. Sentance,andrew senior economic adviser to pwc, thank you very much. An increase in court in qa qe. The cable rate dropping by over one full percentage point, the biggest drop in about two weeks. Gilt, you see the yields come in. 131. 67, downe at 1. 2 . Alix a huge spike in the ftse 100 as well. We will have coverage from start to finish of mark carneys News Conference starting at 7 30 a. M. Eastern. David we want to welcome worldwide for a special interview with Brian Moynihan, bank of America Merrill lynch chairman. Thank you for being here. How does this affect bank of america in its business in europe . Aian in europe we have business that deals with Large Companies and investors so there will be a lot of activity today. If you go to the heart of it you have an economy which is bigger. Han california that needs help Governor Carney and the Monetary Committee is trying to help it continue to grow with a surprise from brexit causing concern. Us to brexittakes really because that is what Governor Carney is responding to. For england and europe, what do you say right now through your dealings with clients, your affect of brexit . Brian it was a surprise that it went that way so people are still adjusting to that. Adjustments range from personal disappointment to, now we have got to figure out what is going to happen. We all have plans that got us through the initial thing and volumes went through the roof, all handled well by the industry. Now you are into what are the plans and how do you conduct business . No one knows what the rules will be so we are trying to keep everybody calm down because there are real people involved, Real Companies involved, but no one knows the rules because this is a bit unprecedented. All you can do say right is say right now, let me try to plan. Are you seeing clients pullback from deals they would be making or converse, are they making more . Brian not really. Clients will adjust their oriness plans but like us any client, you can adjust your Business Plan when you know what you are adjusting it against but not against an unknown. At thell be looking hard resolution when it gets passed, the time frames, the outlines. O not expect a lot of activity the uncertainty could cause people to think twice about something that right now you are not seeing that much. Alix the uncertainty and volatility seemed to help big banks trading revenue. Is that kind of boost sustainable if you take out some kind of exogenous event like brexit . Brian the volumes come up one day, one day it is Something Else. Over a period of three or four days over the context of 60 odd trading days, it does not drive the earnings much. The issuance market opened back up and you have to remember what it was like march april. That stability is what drives it. There are markets all over the world and something going on every day. Jonathan we will talk about record low bond yields and speculate what that means for banks. Back to this bank of england low acrossilt yields the curve. What does this mean, record low yields and a flat curve as well . Brian the issue and the contents of banking, we take deposits from customers and make loans. The problem is the value, when you have a floor that deposits are at zero, it becomes less valuable. That has become the problem with bank earnings. It does not mean we are not hitting the returns we are supposed to hit that it would be easier if rates were higher. Pay nothing to the customer other than provide Great Service and we pay nothing if the rates are higher. Pointss go up 100 basis our country make this Company Makes about seven and a half billion dollars more. We do not sit around and wait for that. Jonathan a lot of people are sitting around and waiting, some of the investment banks doing a fantastic job of getting deposits, getting households on board. When do you expected to pay off . Brian it pays off every day. Think of deposits and loans being removed but those are real people. We has 60 billion more than people put with us to transact business. We get deposits because that is the Business Model and that drives our size and scale and scope. We are 13 of deposits in the s away very disaggregated market, plenty of opportunity to grow. We have the best franchise there is an we keep driving that growth. David we are talking with Brian Moynihan, ceo and chairman of bank of america. Lets talk about banks because they have been in the news recently. How bad is the situation for european banks and how does it affect bank of america . Brian if you think about two different types of activity, the domestic activity, we do not compete in that business. The Capital Markets, as european banks continue to address the post crisis change, market share comes up and you can see that the banks who have made those changes are far into the new style with limited risk and clients are getting some share. The reality is, the thing people need to remember about europe is it is much more difficult to manage. In the u. S. It was tough because of multiple regulators but what we do not have is multiple jurisdictions and multiple regulators. Issue, they do not have the Capital Markets in europe so there is no place for these loans and securities on the books to go. In the u. S. If we could get this off the Capital Markets we could rebalance the Balance Sheet. 800 trillion of shrinkage went on, nobody knew it. That is harder to do in europe. Multiple jurisdictions, multiple banks. It at a paceing to that is more slow and people can be critical, but it is hard. David we look at stress tests, we have them here, they have them there. What did we learn about the state of the european Banking System from the stress tests . Brian i think it showed that companies had the capital for a reasonably difficult recession to get through. It showed on a relative basis the u. S. Stress scenario is much more severe and the capital bases come out about the same. We are a more mature place in this recovery and some ways in terms of Banking Structure and they will get their. Bringing at stress tests, that puts the focus on italian banks and their nonperforming loans. What should have been done and what should be done now to help capitalize, recapitalize the italian banks . Brian they are doing it now. We are helping and we have helped over time in others. You have got to balance the real economy, the effect on the real economy and effect on the Banking System and stability. If you think about the late 1980s and early 1990s real estate crisis, they pushed the asset so far that you kept driving the economy deeper and deeper. Have to make a choice and the policy have made a choice to go slower to make sure that the real economy can be supported. They have to get those assets in the hands of people and repriced out. Alix and you are going to continue to help . Brian that is what we do. Whether it is a bank or a company in the u. S. David back to the United States, there has been a lot of change in your business over the last eight years since the crisis. Where do you think u. S. Banks stand with respect to washington and the public at large . Look if you go back and at various things, our brand scores are the highest they have ever been, our brand is growing. There is a dialogue about the system that will go on and probably go on forever. People think of glasssteagall and all this debate. There was a debate at that time about the structure of the Banking System. We are healthier, have more capital and liquidity. We go through the stress test and it shows we can survive a terrible recession without any prior warning and have more capital than we started the last crisis with. On top of that, the activities are different so the system is in good shape. The question is, have you set the boundaries and barriers the right way to continue to drive the real economy . Our job is to facilitate the economy and we need to set the balance right. David if things are going so well, why are you soap unpopular as a group so unpopular as a group . What accounts for that . Brian part of it is their big. Part of it is people are worried, could these banks create the same distress . When people think of glasssteagall, people have different views of what it means. Some it is size, some activity, some risky training. When you think about the regulatory and what people around the companies have done from capital, multiples of it. Liquidity, multiples of it. We make money trading every day last quarter. Billion 40 million of hours. At the time of the crisis we were probably around 400 million. The revenues that one away our revenues that should have should not have been done and are gone for good. Risk is down, capital is up, liquidity is up. It is a much safer system. Now the question goes, is it too big . At the end of the day, we are the sixth or seventh largest Capital Market in the world. Our companies are big and market cap and size because our economy is big. We only have 13 market share on Consumer Banking and 1 trillion in deposits because our economy is big. People forget the reason we have big banks is to support Big Companies and a big economy. Jonathan live on Bloomberg Television and on Bloomberg Radio worldwide, you mentioned a couple of times about how much you do to finance companies and help consumers. David began with the question on whether the rhetoric would continue. Has mentioned before that the attacks on the central bank harmed the transition of Monetary Policy into the real economy. Does the political rhetoric and wall street hashing harm your ability to finance the u. S. Economy . Brian let me give you an example. Yesterday i was in grand rapids, michigan. Did 18 more Small Business loans year to date this year versus last year and we are investing in our community and growing our Small Business loans. If you go from city to city and town to town, that is what we do so our mortgage production is up, deposits are up, car loans are up, Business Loans are up 12 year over year. It is very competitive. The most competitive segment of our business is a middlemarket loan. It is unbelievable how competitive that is between ourselves and the smaller and mediumsized banks. Jonathan the wall street bashing coming from d. C. Does not harm the way you operate in any way . Brian we are operating in a responsible way. We have to grow and when we are growing, it is good because we are reflecting that our customers grow. David you are talking about growing it responsibly. Theyre warning about u. S. Banks lending on commercial real estate and that it is escalating quickly. To some extent, more risk is being taken. If your book on commercial real estate growing fast . Brian not really. Was 80a book that billion around the crisis and we brought it down to about 60 billion, but what is in that book is carefully crafted. We are fairly conservative. The way you think about Risk Management around commercial real estate, how much of your loans we have in a segment and what types of risk we will take in that segment. We do it in a very disciplined way. I think the controller and others are concerned because loans that typically get a bank and trouble our commercial real estate loans as they are very tied to local economies. What can happen in Real Estate Development off the backs of the om miracle, real estate is very locally tied and yet the easiest loans to do. There is always demand for it. We look at it very carefully. Alix i am glad you brought up commercial real estate. If banks are going to step away from commercial backed securities due to Risk Retention what would make you step away from that market . Brian we would look that is an active practice. Up question is, can you open those markets given the set of rules . That is no different for the residential side or commercial side so we need to figure out what transfers the risk. What we learned from the crisis is restructuring the way things worked. Lets flip that around. The reason why the American Economy can be so big with less than half of it on the books of the banks we have the Securities Market so it is in the economys best interest to get those markets back open. You will see as the demand side for credit goes up, you will see people start to open up those markets over time assuming we do not get into a recession. David talking about bank of america specifically, First Quarter pretty rough, Second Quarter better. What are you looking at for the Third Quarter . Brian we basically are driving what we call Progressive Growth and theres a lot of seasonality. Generally, everything coming from the Second Quarter is very solid. We earned about 5 billion between the operating businesses, balance between the consumer businesses and Wealth Management. We are still getting the expense space down and that is something we will get down over the next few quarters. We have brought them down by 20 billion over five years and now we are just finetuning it. David what about returning capital shareholders, do you expect that to keep going . Brian we received approval to increase our dividends from . 20 a year run rate to . 30 and increase our Share Repurchase up to 5 billion from three and a half billion dollars. Back, why are we returning capital to shareholders . We have a tremendous capacity to grow on our Balance Sheet without using capital. David lets talk about fin tech, much in the news. What is bank of america doing in that area . Brian fin tech for us is not something new. We have been doing Online Banking probably for 20 to 25 years so we have 30 million Online Banking customers. On the commercial side, Treasury Services is all electronic. Went that has enabled us to do is create Better Service to the ,ustomer at the same time making the company more efficient. Branches and600 60,000 people, and the Customer Base is up 10 , deposit up 40 . It is a much bigger business enabled by the electronic capacity of most consumers. They do their payments off the mobile phone, quit sending out checks and cash. David what about transfer and Payment Systems . P to pif you go to the system, right now we do about 2 billion a month through a thing called clear exchange, a collective of banks. What a group of banks is trying to do is get clear exchange, which operates today with a better product. You have heard us role that out. Others are coming up. The idea is to get that across the system and give it to Smaller Banks so everyone will have it, and you will make that as ubiquitous as jacks. They give it as checks. As a way to make a payment. Ultimately, to make cash out of the system, cash costs us 1 billion to move around our company. David 1 billion a year to move cash . Brian take it, sorted out, load its, if you think about that is more secure and safe if people are not carrying loads of cash. The methodology of transfer has to be realtime and easy and that is what we are developing. David put a size around that compared to a paypal. Brian we do about 2 billion a month on a run rate of 15 a year. I think they are doing 4 billion to 6 billion year. David what is this going to do to the Banking Industry . Brian what changed between one floor of the Exchange Room versus every room was full and they are expanding. The more electronics, the less people. We have been applying technology to process over and over again. Risk, morere, less risk managed capability. I think employment will continue to drift down on a relative basis but we will be doing more for customers. David what is the biggest growth area for bank of america . Brian our Wealth Management and consumer business because the people there earn money, save money, but money to work, and that is where we can drive the business. Corporate Investment Banking and markets, we think we are still getting to what is our right share. Moynihan,t is brian chairman and ceo of bank of america. Jonathan the reaction to the bank of england decision on bloomberg. A rate cut from the bank of england, an increase in qe, a Corporate Bond program as well, and you see the fx market reaction. You can see the reactive in the bond market, alltime lows and some of the biggest moves on lt curve. Ead of the gi 10 year yields coming down 13 to a record low at 67 basis points. A 30 year yield coming down 12 basis points. Outperformance coming down the long end of the curve, one and a half percent your yields on a u. K. 30 year. In a moment, bank of england will have ak carney News Conference. Jenny scott will conduct a questioning. Governor the first rate cut since march, 2009. Speakor mark carney will imminently as they justify the Monetary Policy and the rate cut. Take a listen. To leave then European Union marks a regime change. In the coming years, the u. K. Will redefine its openness to the movement of goods, services, people, and capital. In some of the adjustments to these may prove difficult and many will take time. The u. K. Can handle change. It has one of the most flexible economies in the world. It benefits from a deep reservoir of human capital, worldclass infrastructure, and the rule of law and their people are admire the world over for their strength under adversity. Clear, the future potential of this economy and its implications for jobs, real wages, and wealth [indiscernible] offset theully Economic Impact of a large structural shock. Policy cannetary support the necessary adjustments of the u. K. Economy during a time of heightened uncertainty. That is why t, at its meeting agreed to a mpc package of measures comprising a 25 basis point reduction in bank , a new Term Funding Scheme to reinforce the pass through of that cut in bank rate. Also a new program of private asset purchases with up to 10 billion pounds of you cake but bonds and a 60 billion pound expansion of gilt purchases. We took the steps because the Economic Outlook has changed markedly. With the largest revision to our gdp forecast since the moc forecast was formed on to get two decades ago, we are from either with the risks. Now face it fit off between the degree of support we give to the economy on the one hand and how fast we return inflation sustainably to targets on the other. By acting t early and canrehensively,he mpc bolster confidence and support the necessary adjustments in the u. K. Economy. Of degree in composition that stimulus is largely determined by the effects of the vote to leave the eu on demand, supply, and the Exchange Rate. Demand, the 9 depreciation of sterling since the referendum will boost exports and weigh on imports. However, even though the mpc expects external sector not offset fully the drag from substantially weaker private demand. C expects several factors to weigh on employment and Consumer Spending overtime. Heightened activity, weaker real estate and the higher cost of capital for u. K. Focused firms. Some of these effects are beginning to manifest in surveys in Business Activities in the Housing Market. These indicators have fallen cases to levels last seen in the wake of the financial crisis and in some cases, to alltime lows. C has been conservative in its interpretation producing a forecast stronger than historical relationships would have implied been nonetheless, we expect aggregate demand to grow only a little over the next few quarters before picking up the rates below those projected levels. The extent to which the slower path is likely to be a company by a lower path for aggregate supply is a key determinant of the inflation outlook. The weakness in demand will itself weigh on supply as low investment restrains growth and Capital Stock in productivity. There could be more direct implications for supply from the decision to leave the eu. The u. K. Trading relationship will likely change but precisely how will be unclear for some time. Aboutpanys are uncertain the future impact of this on their businesses, it could delay decisions about building capacity or entering new markets. In addition an anticipation of the new trading arrangement, a beiod of reallocation could. Ffecting others areas as a result of these factors, remains levels to below the combination of these demand and supply factors means the cumulative gdp growth is expected to be 2. 5 lower by the end of the forecast than was the case in may. Stimulus, even after the margin of Spare Capacity is expected to open up and the Unemployment Rate expected to rise from his current level of 4. 9 to around 5. 5 over the next two years. Fall in sterling will push up import price and Consumer Prices notably over the next three years. Despite the much weaker outlook in activity,cpi inflation two years is projected to be higher than expected in may reaching 2. 4 at the p twoyear and threeyea point in our forecast. C agreement that when shocks exist over an extended time, it is likely to have an exceptional tradeoff. Case, it is the requires the mpc to require how it bounces that tradeoff including the rise over which it aims to return inflation to target. Offsetting sterling depreciation on inflation would require a exerting further downward pressure on domestic costs and that would mean even more lost output and a total disregard for unemployment. The committees judgment, such outcomes would be undesirable in themselves and moreover, they would be a mike lee to generate a sustainable return of inflation to target beyond its threeyear forecast horizon. As a result, in order to mitigate some of the adverse effects of the shock on growth, the mpc is setting policies so inflation settles a target over a longer time than is usual 1824 months horizon. To achieve this balance, the mpc is implementing a timely coherent and comprehensive package of measures. That response is timely because the culmination of the markedly we coul weaker outlook of the economy dictates the need for stimulus now. Cutting bank rates will immediately ease financing conditions for households and firms. Around half of mortgages 4 are more than 5 a bank loans held by ferns. By firms. Second, the package of measures is coherent. That whencognizes Interest Rates are very low, bank rate cuts might not be fully passed on to the Interest Rates actually faced by households and firms. There have been examples overseas of Interest Rates on loans increasing when official policy rates have been reduced from very low levels. That thes determined stimulus the economy needs does not get diluted as it passes through to the Financial System. Thats what it has launched a new Term Funding Scheme. Reinforce the transmission and cuts in bank rates to the Interest Rates faced by households and firms. Compared to the old funding for lending scheme, the new tfs is a per Monetary Policy instrument is likely to be more stimulative pound for pound, specifically, it reinforces those bank rate cuts. Secondly, it reduces the effect of lower balance for bank rates abovese to but a little zero. It charges a pentyl he rate it banks dont lend and it covers all types of lending and it is funded by centralbank reserves. U. K. Banks and Building Societies can borrow up to 100 billion sterling over the next year at rates that neutralize the effects that could otherwise cause them not to pass on the new Lower Bank Rates to borrowers. The coherence of todays packages further enhanced by the fec decision to leverage the ratio for u. K. Banks by excluding centralbank reserves. Effectively, this gets a regulatory constraint out of the way and Monetary Policy operations without compromising Financial Stability. Fpc earlierd by the action of increasing credit by 150 billion pounds. It emphasizes the Bank Liquidity reserves are usable and it is enhanced by the pra board decision to use flexibility to smooth insurers transitions to new regulatory standards in a very low Interest Rate environment. Third, this package is comprehensive. The newin bank rate, tfs, the new Corporate Bond purchases and the expansion of gilt purchases work through multiple channels. They are majorly reinforcing and a more and are more powerful as a result. In the absence of these actions come out that would have been lower, unemployment higher, and lack of greater and the return of inflation to target would have been less sustainable. 10 billione of up to of u. K. Corporate bonds will support the real economy by directly affecting the financing conditions for companies that make material contributions to u. K. Economic activity. Investment, this action should improve the Monetary Policy tradeoff with inflation. By acting in Capital Markets, it will become clement treat to the tfs which reinforces the bank lending channel. By lowering the credit and liquidity premium, Corporate Bond purchases are an efficient means of providing stimulus. Byanding the stock of gilt 60 billion pounds will reinforce the transmission of Lower Bank Rates to longerterm market Interest Rates. In addition, by triggering the process portfolio rebalancing among sellers of long dated gilts, purchases will translate to other risky purchasing providing additional stimulus directly. In conclusion, the mpc has worked with the banks committees to understand how conventional and unconventional monetary measures interact with the Financial System. We have tailored our approach to avoid unintended consequences. Multipleoach using channels will ensure that stimulus will have maximum impact on the real economy. By acting now, the mpc is supporting the necessary adjustment of the u. K. Economy and ensuring a more sustainable return of inflation to target in the mediumterm. This timely, coherent, and copper ansa package of measures is appropriately sized given the scale of the shock in uncertainties about the degree of adjustment, and the relatively limited data. All of the elements in this package have scope to be increased. Lower bank rates, increase the size of the tfs, and expand the scale or variety of assets held in the asset purchase facility. Datad, if the incoming through broadly consistent with the august Inflation Report forecast, a majority of mpc members would anticipate a further cut in bank rates to its effective lowerlevel i one of our forthcoming meetings during the course of this year. Is the announcement latest element of the banks joined policy response to the referendum. Its a plan that was based on months of extensive analysis of the risks, detailed planning, and appropriate public and medication. Its a plan that delivered a broad range of contingency measures to contain the Immediate Impact on the Financial System of the result of the referendum. Its a plan that has expanded the amount of credit available to the real economy. Aw its a plan that delivers timely and coherent and copper hints of Monetary Policy response that lowers the cost of credit and improves financial conditions for household and businesses across a wide range of channels. Continues tongland stand ready to take whatever action is needed to achieve its objectives for monetary and Financial Stability as the u. K. Adjusts to new realities and moves forward to seize new opportunities outside the European Union. With that, we would be happy to take your questions. Please give your name and who you represent and your limited to one question. From the financial times, can nottary policy mitigate but reduce the shock of brexit . We can act quickly. I think the bank has acted quickly from contingency the actions ofw the mpc so Monetary Policy is more nimble and its appropriate that its the First Responder to a shock. Clearly, the biggest elements of the change are structural. Policy has to take those structural changes into account. It cannot really do anything about the structural factors. The biggest issues for government are those they have acknowledged which is the importance of the negotiations with european allies on the new relationship that will be developed, the importance of having a productivity plan, comprehensive activity plan for the country and its within that andext or those decisions those policies which will really be the determinant of the monetary prosperity. What we need to do in that context and in advance of those decisions is to provide the appropriate sense of Monetary Policy to ease the adjustments. We are governed by agreements and we are governed by a tradeoff in setting the right tradeoff between getting inflation back sustainably and supporting output. I think we have pretty clearly outlined how we see that tradeoff and where we can provide support. In the Inflation Report, you do not see the u. K. Having a recession . Is that as a result of the action the bank has taken. Would the u. K. Have faced that recession were it not for your decision today . Our central forecast is for a relatively modest period of growth for the second half of this year. There will be little growth in the second have but positive growth. Thats our central expectation on the growth would pick up over the forecast horizon aided by thetary policy as transmission comes through. Growth would pick up to levels below that expected in may. Thats our central expectation. If we had not taken the steps we took today, we expect output would have been lower in unemployment would have been higher. We would have achieved a poor balance in terms of sustaining Going Forward. Are all the forecast, there risks on all sides and a possible growth could be stronger and a little weaker. Actions we have taken today by acting through multiple channels with a coherent policy package, we have improved the economic outcomes for this country. There will be less unemployment , there will be more activity, and there will be a Greater Prospect of a successful adjustment to the new realities the u. K. Faces. Governor, given the supply of finance which is a serious issue facing the u. K. Economy, how can you be sure that any of the measures you have announced today will work . What is your message to savers must be looking at the announcement today and thinking there is no point in me saving money for the future . We are living through a time of considerable uncertainty. One thing we can do is reduce the uncertainties over the issues we have control. We have tremendous influence over the supply of finance, the price of finance in this economy. The actions of the fpc a few builds on years of building up the Capital Position of the banks, have been absolutely reinforced by the actions of the mpc today to improve the price of credit, overall financial conditions. I want to stress the point that the mpc did not just pick certain stimulus measures. It sat down and thought through and had conversations with the fpc npr a board to think through how various stimulus auctions would interact with not just the banks but the Financial System as a whole and designed the program to determine that we would get the maximum amount of stimulus to households and businesses. Thats why the tos exists. The tfs exists. Its an example of the tremendous advantage of the structure of the bank of england that we are also supervisors of the banks and Building Societies and we can really get under the hood and understand how they will react to certain policies. Businesses andut households, if you have a viable business idea and if you qualify for a mortgage, you should be able to get access to credit. This is not 2008. Its a different world. Peoples memories and so its important to take that off the table. Stimulus measures we are taking and we thoughtgh it through in terms of how and we will watching we will be watching that they flow through. That has an effect. As with all Monetary Policy measures, its an effect that builds over time and there is an immediate cash flow effect that people see. It will build over time and have an impact over the forecast. Let me turn to the second we can control no more. Orre not goi to ignore step aside on those issues when its our responsibility. This ispect to savers, something that we think about a lot. We are a group of people who have worked hard and absolutely done the right thing and set money aside. Andreturns are very low they are likely to be low for some time. That is true in the u. K. And in all advanced economies. The challenge is to get the economy in a position so it can grow sustainably at a higher rate. Will becisions determined not by the Monetary Policy committee but those are the big structural decisions that will be made by governments. We can support that adjustment and we will and we will ensure for savers, for Pension Funds, Insurance Companies, for other pools of capital, that ultimately, our our only there. For the benefit of u. K. Citizens for all of those entities, there will be a better economic outcome. The economy will grow more. Fewer unemployed and ultimately, we will adjust to this new equilibrium faster and in a better way and that is our contribution. Last week, no at west talked about their concerns about negative Interest Rates. This is something you yourself have expressed concerns about in the past. Rule outw definitively the possibility of negative Interest Rates . You say you are currently bound to the lowest level of Interest Rates just above 0. 0 to the use of the word currently. Thank you for the question. , i am might have gathered not a fan of negative Interest Rates. We see the negative consequences of them through the Financial System and have seen that and other jurisdictions. That gohe issues further than the issues we have just raised. To provideer options stimulus to see if more stimulus were needed. We dont need to go to that resort. Cleark the mpc is very that we see the effective lower bound as a positive number, close to zero, but a positive number. We will continue to be clear in our expectations on that. Let me say this about the banks the banks have no excuse with todays announcement not to pass on this cut in bank rates. They should issue that to their customers. On that last point, it looks e intentionally 700 myth 750 Million Pounds youre doing to the banks through the term it is reducing their funding costs against the 1 which you say is the average norm at the moment. Yout possible or are considering wrapping this up with a condition around bonuses or dividends to make sure there is a responsible approach year . There are two sides to this. One is that what we have seen elsewhere and what we see here is as the supervisor is the squeeze that starts to come in on bank margins. It then affects the price they charge and marginal levels. Theyis about the new loans are making, the price they charge a new loans, that happens when Interest Rates get close to zero. We have seen this movie elsewhere. We have seen the sequels elsewhere where we have been monitoring this for a number of years. We have carefully calibrated the pricing and the sizing of the effect sotralize this there is noegate, reward for the banks and there is no penalties for the banks. Is is a facility that ensures they can fully pass through the cut in bank rate. They will fully pass through the rate cut. Its a facility that also means we have some limited but additional flexibility to lower a bank rate if thats required to support the economy. Its in a way that that further reduction would be passed through. It is offsetting a squeeze that could be there. It is an advantage of the structure of this institution, candidly, and the mpc listening to other parts of the institution and asking questions. To understand these dynamics and design a facility that does that. Penaltyenalties rates of banks reduce lending. I would stress that this is not the transmission of those bank rate cuts to the real economy. As opposed to a scheme to incentivize certain amounts of lending. This is designed for a different purpose. The chancellor said he was prepared to take any necessary steps himself to boost the economy over the coming months. If he was to issue infrastructure bonds for public investment, would you have an objection to using the asset purchases to buy those bonds . Expect, sinced the chancellor was appointed, he and i have met a number of times to discuss the economic situation, to discuss policy options. As you would expect and as you himselfe chancellor knows the brad the broad outline. This decision has an indemnity being given for the asset purchases. We had extensive discussions of the possible decisions of the mpc. We are fully aligned in terms of or fully informed in terms of the mpc prospecting and a broader bank thinking about what we can do to support this adjustment. Note, he has been to takeat he is willing any necessary steps to support the economy and reduce uncertainty. Those are the decisions for him and the government and they operate on a different timeframe. We are not privy to those decisions and we make no assumption about any change in fiscal policy. The mpc thinks this is the right package for today. Its not appropriate for me to commit that we would countenance doing Something Else beyond what we have said. The one thing we have said is that for a majority of members thehe mpc, if the data over course of this year comes in broadly consistent with the forecast in this inflation toort, they would expect bring bank rates to that lower effective rate just below zero. Just to go back to the source of all of this, drawing on your experience, how extraordinary was the problem with which you were presented by the brexit vote . Situation inusual the sense of it is a very large identifiable supply shock. The biggest news on the horizon is there will be an adjustment to the supply potential of the economy. I would distinguish that there is an adjustment with the changed relationship with the eu and there is an adjustment which may happen at the same time or slightly after with expanded relationships with the rest of the world. We have to think about that supply shock and how that affects the Economy Today. That is relatively unusual. What isnt necessarily unusual is to be in a position where there is a tradeoff between supporting activity and the time horizon over which a Monetary Policy committee returns inflation to target. One of the advantages of the here is that we have to be very upfront front and transparent about how we thought about that which disciplines the committee. We come out and are clear over the horizon and how we will support the economy. Unusual is the supply shock but the tradeoff is not that unusual in the third aspect which is somewhat unusual or the fact that given Interest Rates are whatively low, and given we now know about the interaction of conventional and unconventional policy in the Financial System, it has been hastively unusual or required some creativity or innovation in terms of the design of the package in order to get the right amount of stimulus in a way that will really affect underlying financial conditions. One of the responses you may get to this from people who supported brexit or some former mpc members, is this is an overreaction based on fairly limited evidence. It could even undermine rather than boost confidence because of the scale of the bank actions. How do you respond to that . This is the appropriate response to the Economic Conditions in which we find ourselves. This is a response which will make this process of negotiation, transition, ultimately brexit it will support it and make it more likely to be a success, not just in the longer term but in the near term. There is a great degree of uncertainty which is understandable. About thencertainty eventual model we will have with the European Union. There are a number of options on the table. Model is chosen itself will require some degree of adjustment in the economy and that brings us own effects on growth and productivity for a time. Ben to expand on this, we are seeing these risk manifests in a wide variety of indicators which in many cases are better indicators of what is actually happening in the economy then socalled hard data. There is a clear case for inmulus and stimulus now order to be there when the economy really needs it, to have an effect when the economy really needs it. This is about cushioning the supporting the adjustments, taking uncertainty off the table, and ultimately, making this a success. I might ask ben to speak to some of the data. Information, we get degrees. Even the early official estimates of gdp, i would not describe is totally hard in that they get revised for many years afterwards. Surveys continue to have information about what that final estimate of gdp will be many years from now. Chart on page the 22, the top of that page, this is one of the more reliable indicators of activity. We have waited the sectors into one single serious or rathertwo. Falls in the steepest both of those series we have ever had. They are both of them at levels we have not seen since early 2009. Are reliable indicators, these and a few other surveys. If youd them at face value, they would suggest the economy is contracting. Off of it because on occasion even for these surveys, big shocks can lead to overreactions. Particular, the confident indicators but we would need them to recover in coming months to meet the forecast we have which is for a little bit of growth during the second half of the year. Toont thing its premature have acted in the face of weakening. Weakening employment surveys and steep falls in the avestment intentions and pretty steep roll in of Housing Market activity. On radio two, a saver asked a question for ordinary people about what this meant for them. And has aboutin 6000 in savings and she asked what she does with them . What do your models assume they do with them . Spend theire saver money . Do you assume they are forced into riskier assets . What do you want them to do with their savings . If youre inflation forecast are right, they are earning substantially less over the coming years and the purchasing power is going down. Thing is the way we look at the economy as we look at it in aggregate. That is our responsibility to target aggregates. There are aggregate levels of inflation and keep it low and stable and predictable at about 2 . Thats the core of our responsibilities but to do it in a way that minimizes the impact on output, how much activity in the economy, and employment. We are faced right now with the forecast after a substantial stimulus package where the unappointed rate goes from 4. 9 to 5. 5 which is more than a quarter Million People losing their jobs after stimulus. Should we ignore that . Should we have more people lose their jobs . In order to target a different part of the economy . Should we have a poor outcome for the economy a time when there is great uncertainty . Should we change the way we toage our responsibilities aim off what we are statutorily obligated to do which is to manage this tradeoff to achieve the inflation target over the mediumterm . That is not the judgment of the mpc. Every Single Member must view is that this economy needed stimulus now. Members review isthat his economy needed stimulus now. Ive we fully recognize that interestiod of low rates puts savers in a difficult position and fully recognize there is a difference between individual savers and institutional savers, Pension Funds, Insurance Companies. Andxpect the aggregates what we do see for those bigger institutional savers are the moves into riskier assets, longer dated government debt, corporate debt into equities if they had corporate debt, from equities into hard assets and on and on. That supports the economy and makes it less likely that we will have a very long period of high unemployment and low input and low output and low Interest Rates. We recognize the challenge. Ultimately, this lessens the challenge to the economy as a whole. When you step back, as we must, and look of the Global Economy as a whole and what is happening to enters rates in Global Economy as a whole, there are a variety of forces. Some of it is legacy of the financial crisis and some of it is broader demographic forces and some of it is the rise of china and other economies. These factors are all pushing down on global Interest Rates. Are faced with the choice im certain use jargon but as the equilibrium Interest Rate goes down and in many jurisdictions goes negative, we are faced with the choice of runninggnoring it and Monetary Policy to tight and unnecessarily contracting the economy, missing her mandate or ajusting with the smart stimulus is possible that is as effective as possible that goes to multiple channels which not which doesnt just go through the channel that directly affect the saver. It does not lead to negative Interest Rates. It does that in a way that supports growth and thats the judgment we have made today. You discussed cutting rates immediately and the majority thought that can be done now. You did not in the end because is that because he wanted a unanimous decision on rates . There were concerns among three members about the weakness of the economy. Were you trying to give a unified decision on Interest Rates, hence thats why there was only one cut . There are two reasons. The first is that we were able to provide the stimulus and other ways. We saw value in having a package of measures as opposed to one measure. It goes through multiple channels gi, bank rates of the short end andlt purchases to the long and and loans through new channel and the tfs making sure those bank rates cuts get across. Multiple channels, complementary and mutually reinforcing and stronger as a result. Way, this is backed up by technical decisions of the fpc around the levers ratio. Around the leverage ratio. Have another meeting in september and another one in october and december. Wewill get more data and as said, if the data is broadly consistent with the forecast, majority of members would expect to act during the course of this year. That on allss elements of this package, we have scoped it higher if necessary. We would do so but only to the extent it is consistent. It is very much contingent on how the forecast evolves. Listening to your response about the Central Banks and actions they have taken, did that affect the mpc decision on this package as opposed to waiting and seeing . Is there a level where Corporate Bond buying will be capped . The second isto no and the answers the first effectively is no as well. We are influenced by conditions here. This is a package which targets the domestic economy. Thats where the big adjustments will take place. We have already had a notable Exchange Rate adjustment which will help reducing the external factor, contributed to growth. We see the current account of the over the course forecast horizon. If the domestic economy which will likely need some support from Monetary Policy. That is why we designed the package as we did. On the Term Funding Scheme, you say this scheme was specifically designed to help banks with net interest margins and ensure the benefits are passed on to households and businesses and there should be no excuses. On the other hand, we have seen lenders increase their margins on mortgages. What reassurances, if any, have you had from the big lenders that the benefits will be passed on to borrowers and the potential cost to savers . We did not discuss any monetary policies. With anyone in advance. From theuld expect was concern about negative Interest Rates. We dont intend to move there. At least im not. There are legitimate concerns about this compression. We understand the dynamics of a because we have seen in other jurisdictions. Rateshard to see deposit and one would not want to see them go below zero. There is value to having some offsets. We have a very good line of sight into what that offset should be and thats how we have designed it. I will say one thing which is there is some Legacy Mortgage products that existed prior to the crisis and are still around that were mispriced. Some people have very good mortgages and they should hang onto them. I can understand why some Financial Institutions are no longer providing or made adjustments to the pricing of those products which were mispriced and consumers rightly took advantage of that. Were not talking about that but we are talking about making sure that this comes forward. We expect that is what will happen is the economic incentive will be there and the competition will be there. If you are shopping around and youre not getting keen pricing, go to another bank or Building Society and you should because they all have access to this facility. During the referendum campaign, you warrant that a technical recession was a possibility. Some said that was inappropriate because they said it assume availing stimulus from the bank of england. Today you have forecast but you dont have a recession forecast but the implication is because you stimulated. Do these forecasts vindicate you or them . You are a sophisticated reader as everyone is here. Thed the read Inflation Reports and you know on the gdp forecast, we have a chart. The most likely central expectation and outcome we expect in the second half of this year will gradually pick up to relatively low rates. Inwill be a cumulative 2. 5 the long term relative to what we got in may that growth could be higher or a little lower. I would like you to figure out the probability that goes below zero. Thats a forecast with stimulus. Youou can follow the logic, can make your own conclusion. You talked about monitoring the flow through of this stimulus. I wonder if you could give us more details of how you will monitor that . What criteria will you use and what levels will be acceptable . We look at overall we supervise the banks themselves on an individual basis. We have virtually, if you want, realtime knowledge of whether net interest margins are going where profitability is going. That onble to assess institutional what we are interested in is on an economy wide basis. Its the sector as a whole so we will be watching that. The net is trenches margins of the bank the net interest margins of the bankruptcy affected. Economice the influence of the package as a whole to the performance of the economy, the degree of impairments of loans which flow through. We will look at that but we will fta on this. Shadow we were look at the aggregate effects. The economics are there. Is there for a reason. Its there because there is an issue. The banks are not making this up. Its priced in a way that neutralizes it so that can be passed on, have competition in the banking and Building Society sector and we would expect to see that move forward. There has clearly been a reaction in sterling today to the announcement. Given the announcement as it stands and your package of measures, the bank is quite relaxed about the inflation rate. Is there a size of the client or a proportion of decline and future for sterling that would raise alarm bells for you or maybe a market behavior that the pound is experiencing that would raise concerns . We target the inflation rate. Having an Exchange Rate thats flexible is important. And an important element has served the country well and it helps with adjustment. The stimulus that we designed thebeen targeted at domestic economy but not in the Exchange Rate to support the domestic economy. We would expect to see it flow mainly through that. That we haveint is spent a lot of time analyzing and thinking through the passthrough of changes in sterling to the inflation rate. What we have seen and what we have learned since the financial crisis has been that the passthrough tends to be protracted. It takes place over a number of years. Thes that which creates sharpest part of the tradeoff over the forecast horizon. The reason the inflation is at 2. 4 is entirely because of the passthrough of past depreciation of sterling it so we are making a judgment about looking through that so we are sustainably returning to target. There is a limit to which we would do that. We calibrated this package. Judgment ofy in the the mpc to balance that tradeoff. That the existence of that shows there are limits to where we would go in providing additional stimulus. That sounds like a followup question. You mentioned in the report the potential decline in house prices over next year. Can you quantify that further . Will it start to be a scenario where you could see yourself starting to have conversations about negative rates . Could you have the negative Interest Rates conversation . Know, on the negative Interest Rate conversation. I have been clear on that. You can write whatever you want to take it off the table. I am not trying to be clever. Prices the central forecast and around us, we published a chart and they pick up in line after that. If we are at the point where Interest Rates has to be offset for the Banking System by the term funding and the tweaks to the regulations, what are the implications for the wider Financial System, particularly a persistent low rate . You talk about this move into riskier assets. We have already had seven years of moving into riskier assets. Ande does this go from here what of the financial implications for stability . Let me step out of my mpc role for a second and speak as a member of the fpc. We basically approach Financial Stability from a perspective of we are in a low five world for a long time. Thats the Downside Risk. The stress test we favor are are a flattening type of curve. We look at the implications of very low Interest Rates for Insurance Companies and how that flows back through the pension sector. Classes for other asset and how they manage that. Stage, we understand these risks. Costs we these see these as being absolutely dominated by the benefits of providing the stimulus. To go back to something i said earlier, which we stressed a reason wetimes, the have low Interest Rates is not because Central Banks are choosing this. There are much bigger forces driving this. The question is whether we are blind to that and dont provide the right amount of stimulus for the underlying economy or we take into account it. Makes our job harder as a whole because we have to absolutely worry about these channels. We have to take adjustments. Thats part of the reason why andsee such an active fpc active International Regulatory agenda of which this institution is very much a part of. Vote, wethe brexit have seen turmoil around london. How do you get investors confident again on markets . Does that mean staying toward 2021 . Know where youre going with reassuring investors im glad thats the way you ended up. Privilege toute have his role and its a tremendous responsibility. Been it will not surprise you we have been flat out since the runup to the be on this discussion and i can candidly say that i have not had a moment to sit back and reflect on issue i would not come back to until the end of the year. I appreciate the question. Becausehave an update its a privilege to have the job and we have been doing the job. You said you are not a fan of negative Interest Rates but what are your feelings about helicopter money . Im trying to think of a way to express it. Merit in thehe strategy. We have a range of tools. Alltill have scope under the tools we announced today. There are other things we can do it necessary. Know been necessary that we have to provide additional stimulus. It depends on how the economy unfolds. There is not a need and i cannot conceive of a situation where there in which there would be a need to have flights of fancy and the u. K. In the u. K. Thatu mention here purchases of Corporate Bonds could have a greater effect on the Economy Today than purchases of gilt. Clearthat you have been that you dont see other easing measures going much further, what is the scope to expand the 10 billion given the overall size of the market . We see scope for all of the measures we announced today to go further. We need to give a bit of a context. Roughly 150 billion. We think that purchasing 10 billion in that context is quite possible. There are things we can do to expand the universe of purchases. We will look at only debt that is Corporate Bonds, which are rated investmentgrade by at least one major agency. And we will do an assessment of creditworthiness. We will operate initially in the secondary markets. So bonds that have been in the market for at least a month. And that is where we will start. With the rest of the world how long it will take does the bank go about making forecasts in that case . Do you have something you using . Was we have is a time beyond the forecast horizon with a degree of openness where it will be lower than it is today. And to follow that logic through . Model of the eu relationship has some reduction into the degree of openness compared to being a member of the European Union. But have not picked a specific one. So if you look on average at the adjustment, it is clearly the strategy. The strategy of the u. K. Government to more than compensate for the reduced openness with the eu with greater openness with the rest of the world. This question in terms of the exact timing of the negotiating trade deals. So the basic assumption, which is relevant to the model and forecast is some reduction. Openness, beyond the forecast horizon, which then affects some Investment Decisions today. But of course, the big drivers of this forecast are uncertainty about what we just discussed, which does have an impact. The adjustments that are going on and are expected in property markets, which have an impact on demand. And some marginal increase in the cost of capital. Theof that flows through to outcome. So that is where we end up. We dont pick a model. Thank you, very much. That wraps up the Inflation Report from the bank of england. Bloomberg go. Lets get you up to speed on the policy measures that have been announced by the bank of england today. Rates by 25 basis points to another record low, 25 basis points. and they will start buying corporate debt. The bank of england, the majority of the mps expect another rate cut to zero or near zero by years end. Mark carney saying all elements of the package go to the increase. We know what this means for sterling, a weaker pound. It is bouncing off session lows but down. A weaker pound and a rally in the gilt market. Yields are lower, much lower down for basis points at the front end of the curve. A little bit of flattening of the curve. Ninear yield are down basis points. And these forecast in the quarterly Inflation Report, the overall projections are not dire. But the downgrades are the most ever in a single quarterly Inflation Report from the bank of england. Alix down from over 2 . It doesnt look so bad but it is the degree. More manus cranny is joining us with more. He was inside the room. It kept feeling like he got pounded on the negative rate. Its like no one believes him that the bank of england does not want to go into negative territory. well, no central bank are really want to take their economy into negative. Ates 1. 20 by the end of the year. Sterling, 93 by the end of the year. Have the ability to act more aggressively with the fiscal policy. Timely and comprehensive. By the way, the message from the governor pass it on. 25 basis points are on the cards and unanimous on that. All of the elements in this package have scoped to be increased. The mpc come Lower Bank Rates, increase the size and the scale of a variety of assets held. Cranny buckle up, because post brexit is a bumpy ride. That is the message. I think his tone of voice at one moment became so terse. He said excuse me . There are another two into 50,000 people in this country who may lose their jobs and we have a responsibility. We have a mandate. And that is what he is focused on. He will tell us at christmas. It will be a heck of a christmas. Jonathan already looking forward to the next quarterly Inflation Report in a few months. Was a tense meeting and he is still facing criticism. He says that the u. K. Could face a technical recession and a lot of people accused him for doing the wrong thing. But if you look at these forecast now, they are not higher by any stretch of the imagination. Do you expect the governor and the bank of england to come under continued political pressure about the way they set themselves up through the Brexit Campaign and their response, currently . Personally, i think a lot of that is just a media obsession. Amount of certain responsibility in high office when you take it. I respect anybody, who comes out to try to tell you the truth. He didnt use the word recession. And i am paraphrasing but he said, go figure. The most on record. And to that end, it will be a little bit more and a little bit less. The bottom line here is that there are repercussions because of brexit. England andbank of it is sending a clear message. Question we dont focus on the currency. We focus on inflation. A very clear message from this governor and the bank of england. Ilt yieldsng and keep crashing. Jonathan manus cranny, great to see you. Think of england, a Monetary Policy response. What will be fiscal policy response be . David to help us sort through the bank of england decision to cut rates and ease quantitative easing, we turn to a man who used to be in that room. Posen. Us is adam he served as an accidental member of the boe from 2009 having 2012. Welcome back to the program. Let me get right to it. Too much, too little or just about right . About right but probably a little too little. A lot of credit. They did the rate cut they needed to do. It was about the truth. At the margin, i think they are still a little too optimistic. Theyre not going to end up in a technical recession or a real recession over the next few quarters i also think that the complicated funding lending scheme is not necessarily going to have as much affect as we go further into negative rates, as that would. The bottom line is that they got it broadly right. They got the message right. When you were there, you were dealing with a financial crisis but this is a different problem that they have. This is a decision to leave the European Union. As Monetary Policy work as well in this extent . Right questionhe to ask. This is a real shock. This is about the competitors of the u. K. Economy and their access to Global Markets and what rules they will be under and how vulnerable the economy will be Going Forward these are real things. Monetary policy can help with that by easing the temporary uncertainty to give a break and maybe help the Exchange Rate that fundamentally, it is best at responding to financial panic and lack of liquidity. And that is not what is going on here now. You led into the segment saying, what is next for fiscal policy . And that and trade policy matter much more in this context. Jonathan lets talk about the economics. In the News Conference there was a discussion about the upside and downside to risk output. They are saying, focus on inflation beyond the horizon that we would typically associate with our mandate. I wonder what you think of that. Can you really do that . They are pushing the horizon further out . Adam im not sure theyre pushing it further out. The horizon was always supposed to be 24 months. That is what the mandate is. More importantly, i think the issue is that they have a hard call to make. There is no question on the shortterm effect of this being disinflationary towards deflation. It will be a shock to growth and employment with negative terms. The feedback, which are talked about, is how much the currency declines further down the road putting in inflation. Then, do happens a lot they have to stop short of Monetary Policy . In other words, do they go back towards the things from the 70s . Basically, they are right to say, we dont think this will happen. We will do this now because we think this is the right thing but they will have to reverse if they see the shock is bigger than they expect and that is ok. Alix 2. 4 at a threeyear horizon. When you mention fiscal stimulus, what is the absolute right fiscal prescription now to be matched with the Monetary Policy unveiled today . Adam a really good question. The statement is that if you the shock, to offset you have to be on the fiscal side or on the real side. The biggest thing they can do is try to get the best possible deal on free trade with freer trade to European Unions as quickly as possible. Moreis actually even important. The second thing is that they have to deal with the underlying structural problems of the economy, which is the real estate buckles that occur because they have never done anything to expand on. That is the next big thing. They should have done that even when there wasnt a crisis with exit. And in terms of fiscal policy, if you want to respond to the shortterm crisis about getting money in individuals pockets, you could cut the that tax temporarily. Ranks increase the these are the measure she would take. Finally, as many people have pointed out, there is always a huge crash in funding for u. K. Universities. If you reverse that and put government funding into rmb, it would be helpful. Jonathan we were listening to the News Conference and he could not have been clearer. I dont want to negative rates. I dont wantwant, them. He was very clear. At one point, he said we and then he said i. David they did say the majority of the members of the mp think they will go to zero e4 theyre done. So should they go to negative greats . Should dont think they head to negative rates. It is unfortunate the governor made that call. It is legitimate to think it would work for an individual voter. But the point is that negative rates effectiveness depends critically on the structure of your financials. In japan and italy, you have a large set of small favors to put a lot of money in Traditional Bank accounts. And a lot of elderly people with ordinary risk. Result, when you do that, the negative offset from the political pain offsets whatever positives you get. The u. K. Is more like switzerland. If you can call it that. Settingn active risk set of favors. It has a more flexible Financial System. And also in this specific context, it would matter more in the u. K. Fan japan. So i chile think negative rates in the u. K. Would have less negative offset then they did in japan. And therefore, i think the governor is wrong to rule it out. Policythink that since has the aspect of, what are you going to do next concentrating on saying, we cant cut rates any further and then we have to rely on qe measures is not directly helpful for brexit, and operationally, i think that is the wrong call. I will make a turn now. We have just talked about the bank of england hunt how much theyve taken down their forecast. Does that mean that the u. K. Will win fewer medals in the olympics in rio . I know you have a big study coming out that tracks olympic medal counts over many years and really, it correlates quite well with the Economic Health of the country . Adam thank you for bringing that up. It is about the broader issues of gender and work and economic freedom. This is about the fact that countries generally get medals relating to how well they function in terms of their investment and ability to use human capital. It comes out in capital income and the way women are treated. Cheat, like the opening and through it is not only teaching but it is showing you that you cant make up for an unjust society. So now that the antidoping decision has been made for the track and field for russia, you will see at least a dozen medals on our projection get reallocated from our forecast. As russia will drop from third to maybe forth. We think still third in total medal count but a lot of it will go to the u. S. , china and the u. K. And this isnt just about sports. Doping is a human rights violation because what happens is that it affects the other athletes. When you do it in a place like russia, you are exploiting moldable young women. The impact is greater. It does more damage to these people in terms of their lasting lives and it reflects a society where you use the people in a bad way. And so we talk a lot about the olympics and brazil but it really is about justice in an important way. David another thing i took away from the study is, as smaller economies around the world have grown in proportion to large economies, it is reflected in the medal count . Adam yes, it all goes together. It is partially due to per capita because you have better resources and you can free people up to do training but it isnt just like that. We know the examples of the kenyans who are great runners. It is also about what kind of society were running. What kind of freedom you have. But itry to harp on that is important. And we have seen china come up. It isnt just about population. It varies across sports. H andst poor stress things like that but also aquatics and things like that themore specialized and rich countries and big countries do proportionally well. Things where they are defined by as countries go richer, they treat their People Better and you get better results. Adam, you have gotten us ready for the opening ceremonies tomorrow. Adam posen, thank you for joining us. Basically, the u. K. Will do really badly in the coming olympics . Alix and based on the market, the u. S. Will do really well . [laughter] alix coming up, we have much more on the bank of england stimulus package. The first rate cut in seven years to record lows and what it means for the bond market. This is bloomberg. Alix this is bloomberg. Now to the morning meeting when we hear what to key banks are thinking. I really want is you hone in on the Corporate Bond buying program. 10 billion pounds over the next 18 months. What does that mean for europe . Market you look at the Immediate Reaction to the definitelyt, it was withiety definitely expectations. Expectation was already quite high. If you look at the members vote breakdown, the Corporate Bond purchase versus the qe expansion, you would note that the support for Corporate Bond purchases is higher than that for the qe expansion. The criticism about cutie when it comes to Corporate Bond buying is that there are not enough Corporate Bonds to begin with. 500 billion dollars of available purchases in the u. K. Does that lead to more issuance . Wei it could. And so far, if you look at recent months, the fact that asia has not been that strong has actually kept the threat contained. It couldforward, stimulate further issuance. Alix what about the u. S. Does that stimulate u. S. Companies to offer bonds wei im sorry, i cant hear you. Alix i asked if there was a knock on to u. S. Issuance to make up the difference in supply . Lost wei liave and the audio. If rates slow, take apple they issued that. U. S. Companies will come over. And the ecb has been buying companies. The thing i wonder about is, 10 billion pounds we just althoughsoft know, that, go out for a 20 billion bond in one single thing. For the linkedin acquisition. So how material is that . We have single bonds going out for 20 billion. So buying 10 billion pounds worth, will it make a difference . We did here in the press conference that this is just the beginning. They have much more if they need it. We could argue that would be one of them. To adams point, rates are down to 25 basis points now and he is not sure about expanding other measures. It is a Corporate Bond buying program. So at this point, if you want to make a difference, leaves open the possibility to go lower. The market could really believe that that is it. Wonder ifyou have to that is what we are seeing in the market reaction. Because we are off the lows when it comes to that. The sterling jonathan the market anticipates and then they say more things. Then they say no and we settle down and stabilize. We will continue this debate coming up. The bank of england decision to cut rates for the first time in seven years. Here is the market reaction. A weaker pound. Down by over a full percentage point. Yields are much lower at the front and down by five basis points. Lowds touching an alltime on the 10 year. By davidwe are joined owen. This is bloomberg. . C sv jonathan from new york city, i am Jonathan Ferro and this is bloomberg. Bank of expectation bank of england expectations were somewhere here. The ftse is up off the back of a. Eaker pound the cable rate moves lower by 1. 4 . Fx into ther from bond market, look at the move in the gilt market. 11 basis points. The alltime low yields right across the curve following the decision. In the u. S. , futures are marginally positive. We will look ahead to the cash open in new york. We are you down to the open on bloomberg. David this is bloomberg. It is a big bank of england day. When i look at this, i wonder if mr. Carney essentially kept the ball in play, waiting for the new budget to come in next fall with theresa may. We are seeingike that in japan. They are passing the ball back to the fiscal side. And buyingpoint cut 10 billion pounds in bonds over the next 18 months. Jonathan take a look at this ecb,red to the boj and they can go once more but that is it. We did have a suggestion from Governor Carney before but not much more. Kuroda saide point, he was not going zero so lets keep that in mind. [laughter] david lets check in with our stock reporters. Julie hyman is here in new york. Abigail doolittle is at the nasdaq and mark barton is in london which is where we begin. Mark it was an over deliverance today by the bank of england. It is reflected in u. K. Asset prices. P. M. ,as the ftse at 12 00 unchanged. We rose with the biggest rise for over a month. This. Ghest level for a ftse 100 boosted by the over the bank ofwith england. The british pound index, similar story. Unchanged, look at that move downwards. Down by 1 . 1. 4 lower since july 11. Like that. Nce this is the reason why the only has raised the inflation abovest for 2018, 2019 to 2 . Third asset that matters unchanged, once again on the 10 year. We went down to a record low today with the 10 year of. 63 . It doesnt end there. Have a record low for the 30 year and the twoyear is a whisker away from the record low set four years ago. The european stock market, little change in light of the sledgehammer from the bank of england. Julie i like the sound effects you used for the market reaction. U. S. Futures, we had that upwards but then stocks came terms of u. S. Futures. So little change, slightly higher at the moment. Not only do people here have the bank of england to get through, we still have a lot of earnings. Shery ahn shares up 16 2016 it boosted the earnings forecast. Volume rose by 41 . Revenue of 54 . Excluding the effect of starbucks. It is negotiating an expansion of the deal with that company. We are looking at Canadian Pacific this morning. They said it was getting out of the stock. Selling the 6. 7 stake five years after purchasing and becoming the largest shareholder. They will stay on until the next annual meeting and then he will reside area shares have tripled since the initial buy. , the1st Century Fox Company talking about its commitment to fox news and keeping it on the same track. Profits roseime, above average. Revenue was up 7 but missed analyst estimates. From one media giant to another, viacom shares are popping higher in the premarket. Beat juneom did quarter earnings and Sales Estimates and it looks like the teenage mutant Ninja Turtles boosted sales. The strength there helped out against the weakness around tv ad sales. Around advertising. An analyst is saying that the underlying fundamentals are week here, relative to peers and that investors want some visibility around management. Stay tuned. Turning to another high profile name, tesla shares are little changed in the premarket after the Company Announced its june Quarter Results yesterday after the bell. This is largely after the announcement in july where they said they would miss. Was elon muskght saying the company was in a rough spot around june in manufacturing and now they are coming along. The modelmed that three will be out in late 2017 along with the big goal to produce 500,000 vehicles in 2018. Tesla actually posted a loss in the Second Quarter, 77 percent worse than what analysts were looking for. Much. Thank you so that was Abigail Doolittle joining us from the nasdaq. Act to momentous bank of england crannycision, manus joins us now. It seems like the message at the banks, lenday was this money on. You do this if we give you this coverage. Manus very much a clear message from Governor Carney. Pass it on, in case you havent heard. Really hammering at home. Going after the gilt market and Corporate Bond markets and going after the Interest Rate markets. The first rate cut in seven years. 1994. West since this was an mpc that stands ready that is ready to move forward. Mark carney all of the elements in this package have been scoped to increase. The boe can increase bank rates and expand the scale of assets held in the asset purchase facility. Monetary policy and fiscal policy. The new chancellor and the governor have been in touch. Complementsis, what Monetary Policy . Something quite comprehensive in the terms of fiscal policy. Alix absolutely, there is a ball being passed to the fiscal side. He saw a huge dropoff in sterling and across the curve. Now we are of from the lows. It seems like the message is, give us more. Well, markets like to beg for a little more. Theres nothing wrong with trying to be ahead of the curve. At wb inx. The bestperforming bond market in the world it is the British Government bond market. 6 this year. More bond issuance, that is the message from the analysts. With the bond market return like that, it looks like we can expect to flatten even further and that will potentially see what attracts foreign money into this bond market. This is the bank of england and i like the way this governor acts. He said, what did you want me to do . Where do i balance. And this is the challenge for every single central banker out there. From kuroda to carney to yellen. There is plenty of liquidity in the system, get out there and pass it on. That is the message from this particular mpc. When will they do more . It could be an early christmas present. Alix that was manus cranny. Monthan there is a three return on u. K. Credit at 8 . We have such a big rally in the last hour. Lets keep it on the bank of england decision to cut rates for the First Time Since 2009. David, the chief economist said get out the sledgehammer. Mr. Owen today, he did win. Thinking back to july when they didnt change rates, they said they would go in august which they have done. We also saw them tweak the funding scheme. But they have gone a lot further than what we expected in terms of qe and moving along the curve and buying corporates. There is a prospect to get another rate cut in november and we get a fiscal response also from the chancellor in november as well. The reports will be announced in november in all likelihood and that will probably contain watching more spend on infrastructure. Sirius, certainly today it went further than people expected. I think forecasts are reasonably optimistic. So if you believe in the forecast, it is surprising they have gone this far. Much more concerned about the recession in britain than the actual numbers. Jonathan the next bank of england quarterly Inflation Report is november 3. Traditionally we are used to the autumn statement coming at the back end of the month. If you are Philip Hammond and you have that date in your diary, is the prudent thing to do to run the new budget in october before the Inflation Report . Mr. Owen i think it is. Or at the very least, run it in tandem with the Inflation Report. Should by october, they have a much clearer view about what the economy is doing. Fewously, we have had a surveys but they are pretty patchy and we need to get more hard data coming through. Say, it is the consumer who has to bear the brunt picking up the weaker Exchange Rate. Again to tryd cut to lose consumption. Be a lot more focus on fiscal policy, Going Forward. And they highlighted theres only a limited role that Monetary Policy can do. In these flights id response, you could argue where that volatility comes into its own. So infrastructure should be on the agenda. David you said that they have indicated that they will keep going. And they set a majority members of the mpc thinks there will be more by the end of the year. If that is true, why not do it now . Give more money to peoples hands . Mr. Owen i think they want to keep some of the powder dry. At the moment, i dont think they will actually go to zero. I think they will take the bank rate down 10. I see that happening in november. They may eventually go negative i dont see that at the moment as being a central case. But it will be discussed. And also, they have been discussing what the banks will be doing. That will be discussed internally. So you know, they are out there and they are trying to keep the economy going. And they are trying to take up the risk of recession. But the actual forecast for gdp looks reasonably sanguine. To remember, we have not yet fiscal in the ok and what we do, volatility will intensify. Jonathan i guess you take it with a pinch of salt. No one has any visibility over the next two years. And that will depend on whether you can do much on the Monetary Policy side. Not knowing what the economy looks like in two years. And adam posen came on this program 30 minutes ago and said it was a mistake to rule out negative Interest Rates. Mark carney is very conscious of what that means but as a singling measure, is it a mistake to rule out negative Interest Rates . Mr. Owen there is a particular issue in the u. K. Banking system. How the models work when Interest Rates get down to low levels. And what happens to the model in a low environment. Obviously, we will see that be pension methods. A lot of companies have these issues on their Balance Sheet. And obviously, imposing an issue for the Insurance Companies. In a perfect world, they wont take rates any lower. But they may have to take them negative. Youll have to see more and listen to the speeches as mpc members are out there. Alix it is like reading the tea leaves. David owen, thank you very much. Coming up, more from the exclusive interview with Ryan MoynahanBrian Moynihan. This is bloomberg. David this is bloomberg. Brian moynihan, compared to the european peers, u. S. Banks are further along in their recovery after the financial crisis. Here is what he had to say. It was tough u. S. , because of the size of the economy. Tough because you have multiple regulators but we dont have multiple jurisdictions. That makes it so much harder. That is one issue. There wasnt any place for these loans in europe to go. In the u. S. , we could get them to the Capital Markets and restructure the Balance Sheet. Was he bought merrill, it 3 billion. So shrinkage went on and nobody do it and it went in the market. But that is harder to do in europe. David that was Brian Moynihan speaking exclusively. Us now. Ller joins she follows bank of america and one of the things that he did emphasize was the relative absence of markets in europe and why it makes it so much more difficult for them to restructure banks. Is this something you have been following . Laura yes. They have a lot in europe. Banks like to grow. He has talked in the past about how he might be tang market share. He did mention later in the interview that the jurisdiction is a bit of a problem. So while they may not have certain things, u. S. Banks do have experience in karting over these things but it gets tricky in europe because you have things that are going on in germany and england with different rules. David theres a difference buteen the jurisdictions also, because you dont have the same Capital Markets, the banks play a more prominent role in financing basic economies. How does that challenge regulators as they think about the Balance Sheet . Laura i think it makes the banks that are doing this even more important and that is a bit of a challenge for the regulators, because they look at these more and get more worried about particular banks. David he also said that although they are behind of where we are in restructuring banks, he said they will get there. General,think that in a lot of the banks are making progress. That the regulations go slower and there has not been as many new reforms. The stress test that happened earlier this week we saw that y dont have a pass, fail an irish bank didnt do well. So there are issues there to work through. David we also talked with Brian Moynihan about what it is like to run a bank like bank of america in the low rate environment. Brian it would be easier if the rates were higher. We pay nothing to the customer other than providing Great Services and we pay nothing if rates are higher and that is where we make more money. Makes 7. 5r company billion dollars more in the next 12 months, 2. 5 billion dollars from accounting and the rest is rates. But we dont sit around and wait for that happen. Isid what is interesting me the gratification of how much they are costing the bank of america. How much better off would it be if we ride 1 or 1. 2 . Laura so much better. It would be so much easier for the banks. In the pierce sense of the form this is how they make money. They take deposits, to give a little bit of interest. To give is nothing more, they cant make money. So, every bank has a different profile. Bank of america is really leverage to rates. So Brian Moynihan has been hoping for the change. David one of the things that bank of america is doing is commercial real estate. And the dangers of that growing too far, too fast. Moynihan typically it can with bank in trouble commercial real estate loans because they are tied to the local economy. So it indicates what could happen in the oil economy if rates went down, it could take a bank down. What could happen in real estate so real estate is locally tied and that is why government control is concerned is the easiestt loan. And there is always a demand for it. So we look at it very carefully. David what does your reporting indicate about the growing concern within the Banking System generally in the United States . Mera im glad you asked this question because a lot of banks have not talked as much about it. It is highlighted as an area to be concerned about. Fargo actually is the largest lender in this area, also a bank i cover. It is an area that has to pay particular attention to it. So he handled the question quite well. David directly. Thank you very much, that was bloombergs laura keller. Jonathan coming up, we get to the stock movers. A toll. Prices taking shares down four percentage points. Counting down to the market open. The pound is weaker in global fx. This is bloomberg. Alix this is bloomberg. Boebig news today is the rate cut decision. Julie hyman is here with a check on the market. Chesapeake missing earnings estimates posting the six straight quarterly loss. The company had breakdowns of its assets. 44 million in hedging losses. They are excluding onetime items of losses. Revenue fell by 54 . We are also seeing declines per share of seaworld. Attendance last quarter down around 500,000. The company said it was a drop in attendance specifically at the florida location. Also a shift in timing of the holidays. That affected all of the park locations. The company cutting the forecast for the full year. Shares are down by 11 . Jonathan we are quach are minutes away from the market open. Lets get to the board. Futures positive. The fuzzy up 1. 5 . Look at the fx market. A weaker pound market. Down by over 1. 4 . This is bloomberg. Jonathan we are moments with from the opening bell in new york. Futures up 31. Big rally in europe, london more specifically. The ftse 100 up 1. 5 as the bank of england cuts rates for the First Time Since 2009. As you hear the opening bell rang in new york, i will rip through the other asset classes. 1. 5 for the bank of england. Yields globally encore Government Bond markets, coming in aggressively on treasuries. Down 1. 5 . That is your yield on the u. S. 10 year. Dollar yen stable. 5 seconds into the session in new york, lets cross over to julie hyman to get the market open. Julie the fed, can they raise rates when were seeing easing around the globe. We are seeing stocks in the u. S. Little changed out of the gate with all of the earnings news out. As investors do consider the bank of england and the stimulus in announced this morning. Getting into the movers we are morning, a team this the stocks he is famously still s p sales upr the 3. 4 in line with estimates. Unlike the one in herbalife, tripled in the past five years or so. Agrihim, both of them coming out with , we haveting numbers seen Agricultural Commodities like we decline this year. On the side of 24th century fox, the company talking about its commitment to fox and the fox news network. Estimates. Viacom, that companys earnings beating estimates. Some disappointments particularly, operating income down 25 . Still an ongoing dispute between on the side of 24th centuryreds. That is hovering over the stock. I just want to close out on the insurance stocks this morning. Prudential,ell as metlife plans to cut expenses as it has struggles in its business. The company is talking about Second Quarter profits down 90 and that is because of the variable annuity business. Prudential operating earnings missing estimates by a wide margin. Taking a hit this morning. Upwarde would be any move, we see the earnings weigh on u. S. Stocks today. Minutes about three into the session, unchanged in the s p 500, 1 10 of 1 on the dow. Europe and more specifically london as leachate higher by 1. 5 in the session in the u. K. Confessed scott, she investor strategist. Great to have you on the program. Between bonds and equities. On profits in the equity market move move higher. And the bonde market as well, more specifically. The yields low, low, low. You get the rotation Going Forward or another side they can outperform through the rest of the year. It is a continuation of the latter versus the former. It is a more of a consolidation of the gains if the beginning of the year that it is necessarily indicative of the risk. And u. S. Kup treasuries, 1. 5 on the 10 year. Consequence, the search for yields continues on and as a consequence, he should remain reasonably well bit. We have a taste of what could happen as the yields are backed up. We are seeing a move into bonds today. What can be the effect . It is a great point. They can be violent when they occur. Where a lot of the bond proxy sectors sold 15 in a matter of a couple of weeks. That is, as i mentioned, what im looking at. The search for yield will continue. Up massivent to give capitalist gains if we encounter gettuation in which we sustained increase in interestrate, not just a oneweek wonder. At the market,k we see a lot of money coming in as well as do you think the prepared . At all i do not think so. I think that would probably push the dollar higher. Emerging market currencies, bonds, and emerging equities. Rates, aeased interest byproduct that would warrant a more hawkish tone by the fed. Talk about Real Estate Investment trust. When will we know if there overbought . We should probably know that right now. They are pretty low. More traditional equity instrument. Look at the yield. 3. 5 . Historically quite low. Know they have probably run their course like anyone else. We see in advance in equity prices in the breakdown, it will be time to fade that if not outright kill it from a portfolio. They will come into their own at the end of the month. That might invite new sponsorship into them. Jonathan how difficult is your job right now . Pricesensitive and price discovery. You get the appropriate price at a given time. We have got buyers coming into the debt market and sucking that stuff up. How devalue the markets anymore . This is not the test given to understand how it must work. You are seeing valuation agnostic line taken place. It is not just bond market. We see more of the same spilling over again this year. They look relatively cheap back in the growth recently. That, we have to concern ourselves with macroeconomic issues. Dealing with risk, Central Bank Intervention unlike anything. There are looking macro issues that have as much to do with what is going on in the marketplace as whether you like a stock because the prospect looks good or not. Macro overrides the bottoms up approach and we might get the neighborhood right but get the story wrong. There you have it. Thanks. Chief investment strategist. Of theup, trade is one hot topics in this years president ial election. Is the mexicans government saying about all of this . Were joined now. This is bloomberg. David coming up later today, danny, former member of the bank of england. Jonathan this is bloomberg. Coming up at the top of the next hour, Bloomberg Markets with vonnie quinn and mark are in today. Vonnie we will speak with a former member of the bank of england. Policy, the first time for a rate cut in seven years. Is that enough to impact growth and temper inflation while making sure they reached their target. He will be speaking about the 136 moving away from european investments, looking toward china and asia. Might that change after the action . Also look at why goldman thise about exiting off of and of course, the tiger era is over. Jonathan the bank of gland is very much in focus. Improved upon, exacerbated by here in theengland, United States, Abigail Doolittle, lies in the live in the nasdaq. But we have0 of 1 big movers on earnings taking a trip advisor. Shares are down 8 after it missed secondquarter earnings and Sales Estimates earnings by 9 . A decent miss there. That represents a yearoveryear decline. Olson defending the stock saying this really had to do with a Business Model transition, plus macro trend. The stock and raised the price target to 95 per share suggesting trip advisor could climb to almost 50 . Of earnings, jackinthebox shares are up 10. 7 having the best day in three months. Beat earningsx and Sales Estimates and also boosted fullyear earnings. My entirely biting into this. They believe they are a little bit negative for jackinthebox. Even though expectations are reasonable, there could be some upside for fiscal year 2017, perhaps something could help propel jackinthebox higher in the future. The big trade in the emerging market currencies. Down 10 versus the dollar so far this year. Part of that story has been the protectionist rhetoric. On the one hand, you have donald trump threating to renegotiate saying they intend to deport millions of undocumented immigrants with mexico. Potential for renegotiating nafta as well. What does it mean for a country that depends on the u. S. Mexico. Joining us now is mexicos foreignjoining us now is mexics Foreign Affairs administer. Thank you for joining us. What steps are you taking right now to prepare for a new president in the u. S. . Thank you for the opportunity. The usmexico relationship is so important and strategic not only for mexico but for the United States as well, that it really any specific person or particular political juncture. It really goes beyond even government. What we have been focusing on in is talking about what we are together and what this relationship means for the American People and talking about the many contributions the United States makes for growth and development. It has worked. Noise, the backdrop of information. We have to talk about the jobs that depend on this relationship, a commercial relationship that accounts for 531 billion every year. Every day, every minute of every day of every hour, we trade over 1 million. That is the reality and what we should be focusing on. Now that we are in the election, one of these people will be running the white house. Have you reached out to the campaign and what has happened like . Absolutely. Political actors from both parties. Out for campaign teams. Talking to people and meeting with people, we talked through as for government officials to different clinical actors in the national, state, and local levels. Are complex, multidimensional relationships that involve many actors, actors that are engaged permanently, focusing on how to make their relationship be more productive. How to create more jobs and more opportunities. Alix it seems like the market is not factoring that in right now. Look at an etf fund, very big perish thats. The peso has taken a hit. Credit default swaps are inching higher. All that protectionist rhetoric coming out of the u. S. That does well to navigate globally. They will serve us well in this instance. Globally. We continue to have more foreign direct invest in every year. The country needs to have renewed commitment from those present in the country. That will remain true during the coming month. Take a look now, it is moving higher and it is still negative. Trade balance is in a deficit. There are worries about corruption at high levels of the government. Trade balance, talking about the deficit. Fundamentals versus other emerging markets. There are weak us is emerging even before the protectionist rhetoric in the u. S. We have strong fundamentals and are very omitted to free committed toare bettering our business environment. Todo better and we continue receive more International Companies that want to invest, and the part of the diversified economy. Can youspecific steps take to get it back into positive territory. We will continue to manage public finances responsibly. Invest continue to Government Resources and programs to make it better than the business environment. And we will continue to remain committed to the transformation implemented since the beginning of the administration. Alix are you taking any preventative measures now to protect yourself if we get a trump candidacy and more wall,ic toward doling a what kind of steps can you take . We have been focusing on the american government, state governments, and the United States. Make our border more efficient, how to ensure it is streamlined so we manufacturers to cross the border. We have autoparts crossing the border. We have become more competitive together and we should be focused on that. We should all be working to integrateow more and create more jobs and more opportunities. We should not waste time on that. Alix thank you for joining us. Thank you. Coming up on the program, a big day for the u. K. Economy. The payrolls report, payrolls friday. Story, moret is one on the horizon, a weaker pound, the new york all over the market. This is bloomberg. David karl joins us now. What should we be looking for . We joke this is the most important jobs report, this was absolutely critical. Given the gdp revisions we saw last friday, the economy is on much softer footing. Exclusively Consumer Spending. We need to see decent payroll gains and decent Income Growth to provide confidence the Consumer Spending will have the feel it needs to compel the economy through the bet letter half of the year. Getting toward full unemployment . The debate is raging between economists now. We see a slowdown without a doubt, 12 month moving trends decelerating and the question is , is it the result of weakening economic growth. We have seen that given the gdp numbers. Or is it the characteristics of a maturing economy getting closer to employment. Ofare getting a little bit wage pressures but i suspect it is a bit of both. Potentially Consumer Spending is in jeopardy in the second half not see theif we do labor market continued to fire on also wonders. Test an you tell us can you tell us the difference between these numbers . Keep an eye on average hourly earnings. Thank you very much. Dont forget to tune in tomorrow. A stellar job stay lineup for you. Economicave chief advisor, bill gross, and blackrock global cio of fixed income. Jonathan, another big centralbank day. [indiscernible] [laughter] Jonathan Bloomberg tv. With us tomorrow, payrolls. Another historic day in the central bank to the bank of england cuts rates for the First Time Since 2009. More easing there as well. For myself, thank you very much. That does it for bloomberg. In europe, it is a rally. Market, the coverage of Global Markets continues on bloomberg. Bloomberg markets is up next with mark aren and vonnie quinn. For our viewers worldwide, this is bloomberg. From new york vonnie quinn. Mrs. Bloomberg markets on Bloomberg Television. This is Bloomberg Markets on Bloomberg Television. The bank of england post decision, tesla earnings and comments on bank of america ceo Brian Moynihan. Wrecking data on the u. S. Economy so lets get to julie hyman with the latest. 1. 5 , factory orders down a smaller decline than had been estimated excluding transportation. An increase of 4 10 of 1 , better than estimated. Durable goods orders down three point 9 3. 9 . Xpectations down 4 10 of 1 it looks like these numbers are slightly better than had been estimated as we look at this verse is some of the Economic Data we have this morning including initial jobless claims coming out any much in line