Jeremy Hunt backs inflation battle and says UK is financially stable

Published

2 years ago

March 21, 2023

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Chancellor Jeremy Hunt has backed the Bank of England to prioritise tackling inflation, despite concerns rapid increases in interest rates have contributed to recent volatility in the banking sector.

The Bank’s Monetary Policy Committee meets this week amid speculation it may pause its recent trajectory of raising rates when it announces its decision on Thursday.

Mr Hunt told the House of Lords Economic Affairs Committee that he discusses the issue “regularly” with Bank governor Andrew Bailey, and that reducing inflation remained the government’s focus.

“It’s [inflation] over 10% at the moment, that’s dangerously high, and we need to do everything we can to maintain our focus on bringing it down,” the chancellor said.

“So I only ever say to him, please do what you think is necessary, as indeed you are legally bound to do under the Bank of England Act.”

Moves by central banks to rapidly increase rates after more than a decade of historically low returns is cited as a significant factor in recent financial turbulence.

Silicon Valley Bank collapsed after the value of its medium-term fixed-income holdings plummeted, and the lack of confidence proved contagious, passing rapidly to Credit Suisse, which was bought by USB at the weekend in a Swiss-Government brokered deal.

The UK arm of SVB was bought by HSBC for £1 in a deal brokered by ministers and overseen by the Bank of England and the Prudential Regulation Authority.

Mr Hunt acknowledged that the path of interest rates “is the cause of volatility in financial markets”, but said he was reassured by UK and global plans to maintain financial stability, even in the event of a major bank collapse.

“We have a robust plan to deal with the globally significant banks that would cause a danger to our stability if they were allowed to fail,” he said.

“There are procedures in place and we haven’t yet had to test those procedures, even though one of those banks has been bought by another.”

Markets rebounding

Mr Hunt was speaking after markets rebounded from losses on Monday, with investors apparently reassured by comments from US treasury secretary Janet Yellen, who signalled depositors would be protected in the event of further collapses.

The S&P 500 was up 1% and the Dow Jones 0.9% in early trading, while in the UK the FTSE 100 was up more than 1.9%, driven by banks stocks.

NatWest rose 7%, Barclays 6%, and Standard Chartered and Lloyds were also trading higher.

Ms Yellen told the American Bankers Association that while “the situation is stabilising” she was ready to step in again to protect depositors in the event of further bank distress.

Silicon Valley Bank and Signature Bank both collapsed earlier this month, and First Republic Bank raised $30bn from its peers, led by JP Morgan, in an industry bailout following a rush of withdrawals.

Ms Yellen said: “Similar actions could be warranted if smaller institutions suffer deposit runs that pose the risk of contagion.”

World

Pakistan launches ‘military operation’ against India

Published

11 hours ago

May 10, 2025

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Pakistan launches 'military operation' against India

Pakistan has launched attacks on “multiple targets” across India, according to the media wing of Pakistan’s military.

Pakistan said in a statement that retaliatory attacks are underway in response to what it called “continuous provocation” by India, which fired missiles at three air bases inside Pakistan.

“Multiple targets in this operation are being engaged all across India,” the statement from Pakistan Armed Forces (PAF) said.

Pakistan’s military said it used medium-range Fateh missiles to strike more than 25 military sites, including airbases and weapons depots in the Indian states of Gujarat, Punjab and Rajasthan, as well as locations in India-administered Kashmir.

Pakistan’s military posted footage on X showing missiles being fired from what appeared to be a mobile launcher.

The AP news agency also said loud explosions have been heard in India-administered Kashmir, in the disputed region’s two big cities of Srinagar and Jammu, and the garrison town of Udhampur.

Meanwhile, an Indian military source told Reuters that India has launched air operations in Pakistan, although no further details were given.

The operations mark the latest escalation in a conflict between the two nuclear-armed rivals, triggered by a deadly attack last month in India-administered Kashmir.

Most of the 26 civilians killed were Hindu Indian tourists. India blames Pakistan for backing the assault, an accusation Islamabad rejects.

Pakistan’s Prime Minister Shehbaz Sharif has called a meeting of the National Command Authority, the body which takes security decisions, including those related to the country’s nuclear arsenal.

State-run Pakistan television said three air bases were struck by India on Friday, although Pakistan insisted most of the missiles had been intercepted.

Despite the military offensive, PAF also posted a message on X in what appeared to represent an opportunity to de-escalate the situation.

“Now that a response has been given we hope the neighbour [India] will move to dialogue and diplomacy like Civilized Nations,” it said.

In recent days, both countries have launched a series of missile and drone strikes, although the scale and impact have been consistently questioned by each other.

On Wednesday, India conducted airstrikes on several sites in Pakistani territory. Pakistan said it shot down five Indian fighter jets.

On Thursday, India claimed to have repelled drone and missile attacks at military targets in more than a dozen cities and towns, including Jammu in India-administered Kashmir. Meanwhile, India claimed it struck Pakistan’s air defence systems and radars close to the city of Lahore.

The Indian army said on Friday that Pakistan fired about 300 to 400 drones, targeting military installations along the western borders – a claim strongly denied by Pakistan.

The G7 group of advanced economies, which includes Canada, France, Germany, Italy, Japan, the US and Britain, urged maximum restraint from both India and Pakistan.

“We call for immediate de-escalation and encourage both countries to engage in direct dialogue towards a peaceful outcome,” a statement issued on Friday said.

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World

European leaders to meet in Ukraine for ‘coalition of the willing’ talks – and issue call to Russia

Published

11 hours ago

May 10, 2025

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European leaders to meet in Ukraine for 'coalition of the willing' talks - and issue call to Russia

Sir Keir Starmer will join other European leaders in Kyiv on Saturday for talks on the “coalition of the willing”.

The prime minister is attending the event alongside French President Emmanuel Macron, recently-elected German Chancellor Friedrich Merz and Polish Prime Minister Donald Tusk.

It will be the first time the leaders of the four countries will travel to Ukraine at the same time – on board a train to Kyiv – with their meeting hosted by President Volodymyr Zelenskyy.

Follow latest updates on the Ukraine war

Military officers from around 30 countries have been involved in drawing up plans for the coalition, which would provide a peacekeeping force in the event of a ceasefire being agreed between Russia and Ukraine.

Ahead of the meeting on Saturday, Sir Keir, Mr Macron, Mr Tusk and Mr Merz released a joint statement voicing support for Ukraine and calling on Russia to agree to a 30-day ceasefire.

“We reiterate our backing for President Trump’s calls for a peace deal and call on Russia to stop obstructing efforts to secure an enduring peace,” they said.

“Alongside the US, we call on Russia to agree a full and unconditional 30-day ceasefire to create the space for talks on a just and lasting peace.”

The leaders said they were “ready to support peace talks as soon as possible”.

But they warned that they would continue to “ratchet up pressure on Russia’s war machine” until Moscow agrees to a lasting ceasefire.

“We are clear the bloodshed must end, Russia must stop its illegal invasion, and Ukraine must be able to prosper as a safe, secure and sovereign nation within its internationally recognised borders for generations to come,” their statement added.

“We will continue to increase our support for Ukraine.”

The European leaders are set to visit the Maidan, a central square in Ukraine’s capital where flags represent those who died in the war.

They are also expected to host a virtual meeting for other leaders in the “coalition of the willing” to update them on progress towards a peacekeeping force.

This force “would help regenerate Ukraine’s armed forces after any peace deal and strengthen confidence in any future peace”, according to Number 10.

World

Ten explosions near international airport in India-administered part of Kashmir, officials say

Published

17 hours ago

May 9, 2025

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Ten explosions have been heard near Srinagar International Airport in India-administered parts of Kashmir, officials have told Reuters news agency.

The blasts followed blackouts caused by multiple projectiles, which were seen in the sky above the city of Jammu earlier on Friday.

Explosions were also heard in the Sikh holy city of Amritsar, in the neighbouring Punjab state, according to Reuters.

An Indian military official told the agency that “drones have been sighted” and “they are being engaged”.

It comes as tensions between India and Pakistan across the line of control around the region of Kashmir have boiled over this week, leading to fears of a wider conflict.

On Wednesday morning, India carried out missile strikes in Pakistan and Pakistan-administered parts of the disputed region.

The retaliation came weeks after 26 people, mainly Indian tourists, were shot dead by gunmen in an India-administered part of Kashmir last month.

The government in India said it hit nine “terrorist infrastructure” sites, while Pakistan said it was not involved in the April attack and the sites were not militant bases.

Around 48 people have been killed since Wednesday, according to casualty estimates on both sides – which have not been independently verified.

India also suspended its top cricket tournament, the Indian Premier League, as a result of rising tensions, while the Pakistan Super League moved the remainder of its season to the United Arab Emirates.

Meanwhile, White House press secretary Karoline Leavitt said at a conference on Friday that the US is in constant contact with both India and Pakistan.