Ghana's central bank convenes emergency MPC meeting
The Bank of Ghana's fourth rate-setting MPC meeting for the year had initially been slated to start on July 28, with the rate decision expected on July 30.
In a statement released late Wednesday, the central bank said the MPC would "review recent developments in the economy" during the special session.
The outcome of the meeting, including any policy decisions, will be announced on Friday.
The Bank of Ghana last held a scheduled MPC meeting in May, where it opted to maintain the policy rate at 28.0%, maintaining its tight monetary policy as inflationary pressures continued to ease due to exchange rate stability and fiscal consolidation.
Ghana's consumer price inflation slowed for the sixth month in a row to 13.7% in June, its lowest level since 2021, while the bellwether producer price inflation fell to 5.9% year-on-year in June compared with 10.2% the previous month.
The finance minister is expected to present the cocoa-, gold-, and oil-producing West African nation's mid-year fiscal policy review on July 24.
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Times
an hour ago
- Times
McDonald's, the only firm serving up income with a side of growth
How do you fancy having your standard of living cut in half when you are too old to do anything about it? That's the dismal prospect facing many who are preparing for retirement with life savings that lack protection against the insidious effects of inflation — and it's part of the reason why the government is on a drive to get more of us investing. Even apparently small reductions in the purchasing power of money can have big effects over the 20 years or so that the typical pensioner can expect to spend in retirement. According to the Office for National Statistics, the consumer price index (CPI) measure of inflation was 3.6 per cent over the year to June, while the retail price index (RPI) measure was 4.4 per cent. You can see why politicians and their public relations people prefer to quote CPI, while the gilt or bond markets — where governments borrow from international institutions — reckon that RPI is a better measure of what's really going on. Either way, if those rates of inflation remained unchanged, CPI would cause the purchasing power of your money to plunge 50 per cent in 20 years, while RPI would do so in just 16 years and four months. Politicians and everyone working in the public sector need not trouble their heads about any of this, because their defined benefit pensions have inflation protections subsidised by the good old taxpayer. But all of us in the private sector, who must pay for our own retirement with defined contribution pensions, had better think about how we can preserve — or even increase — the purchasing power of our savings. That's why this 66-year-old DIY investor, unlike most financial journalists, keeps banging on about dividends, or the income that some funds and shares can deliver. It is important to be aware that dividend yields — the income that shares pay, expressed as a percentage of their price — are not guaranteed and can be cut or cancelled without notice. High-yield investments often entail high risks, as demonstrated dramatically when Houthi rebels recently sank a bulk carrier ship in the Red Sea. Fortunately this was not one of the 20 vessels operated by Tufton Assets, formerly Tufton Oceanic Assets (stock market ticker: SHPP), but the inherent risks of investing in shipping are reflected in the rewards of this top yielder in my Isa, which pays 8.9 per cent income. It's only fair to add that Tufton shares I bought for 86p in August 2021 cost exactly the same today — so they have achieved no capital growth at all. But, more positively, income from the shares has increased by an annual average of 6.5 per cent over the past five years, according to the independent statisticians at LSEG, formerly the London Stock Exchange Group. The past is not necessarily a guide to the future. But a high and rising tax-free income does provide two reasons to be cheerful when many other economic indicators make me fearful. Much the same can be said about Greencoat UK Wind (UKW), a £4.4 billion fund that manages offshore wind farms. This is the second highest yielder in my Isa, delivering nearly 8.2 per cent income, with dividends rising an annual average of 7.6 per cent over the past five years. If that rate of ascent could be sustained it would double shareholders' income in less than a decade. Less happily, this is another example of the risk that seeking high dividends can lead to low or no capital returns; Greencoat shares I bought for £1.45 in August 2023 now cost just £1.21. • Is it worth buying shares in Greencoat UK Wind? That's why it could make sense to consider less income today in the hope of more capital growth tomorrow. For example, Ecofin Global Utilities and Infrastructure (EGL) is another self-descriptive investment trust — it yields 3.9 per cent, with dividends rising 5 per cent on the same basis as above. Neither number is quite as exciting for income-seekers as those mentioned earlier, but Ecofin shares I bought for £1.52 in September 2019, as reported here at that time, cost £2.20 at close of trade on Friday. That helped this fund, focused on a wide range of electricity and gas companies, become the fifth most valuable holding in my portfolio. Exchange traded funds (ETFs), investment and unit trusts may reduce the risk inherent in stock markets, which is a big worry for pensioners who cannot make up for losses with a bit of overtime or a pay rise. These pooled funds can diminish risk by diversifying our exposure over dozens of different companies, countries and currencies. That should mean they don't all go down at once. Investing directly in a single business might be more risky but can also be more rewarding. For example, the world's biggest fast food business, McDonald's (MCD), yields 2.4 per cent income, which has risen an annual average of 7.5 per cent over the past five years. Even more remarkably, it has increased shareholders' income every year since 1976. That makes it what Americans call a 'dividend aristocrat' — a Standard & Poor's share that has raised dividends for more than 25 years. • My six sovereignty shares can help you and the UK at the same time Never mind the macroeconomics, I invested 2 per cent of my life savings in McDonald's when I paid $95 in July 2014, as reported here at that time. They cost $298 on Friday, supersizing this shareholding to become the second most valuable among 50 constituents of my forever fund. This just goes to show that income-hungry investors can have our burger and eat it. Either way, with or without fries, I'm lovin' it. Short-term share price shocks can create opportunities for long-term investors, and it's better still when dividends pay us to be patient. Consider the world's biggest chocolate maker, whose share price plunged by 13 per cent on the day it unwrapped bad news earlier this month. Few folk in Britain have heard of the Swiss business called Barry Callebaut (BARN) but many enjoy its produce, which it sells to better-known retail brands including the Cadbury owner, Mondelez, and the KitKat maker, Nestlé. High cocoa prices following a poor harvest have hit all the above, as more expensive ingredients eat into profits. Just two countries, Côte d'Ivoire and Ghana, produce nearly 70 per cent of the world's cocoa. Barry Callebaut shares traded above 1,600 Swiss francs last year but I bit into them at SwFr766 in April, as reported here at that time. They had bounced back to SwFr950 earlier this month before another profits warning prompted that double-digit meltdown, when I doubled my stake at SwFr858 on Monday. They traded at SwFr1,016 on Friday. These shares yield 3 per cent gross dividend income, which has risen by a measly average of 2.2 per cent a year over the past five years. Similarly, Nestlé shares I bought for SwFr65 in March 2014 cost SwFr77 last Monday and yield 4 per cent income, rising by 2.5 per cent a year. I have no idea what will happen next to cocoa farmers in west Africa, and my sticky fingers may get burnt, but I suspect current share prices will look cheap in future. Short-term volatility is baked in but so is the long-term craving for chocolate. • Full disclosure: Ian Cowie's shareholdings
Times
2 hours ago
- Times
Mildly disappointing — but don't think of calling it stagflation
Everybody has their own way of registering higher prices. For me, without sounding too poncey about it, or minimising other people's struggles with inflation, it is the price of coffee. No, not those horrible paper cups and gruesome flavour combinations you see everybody carrying around, but ground coffee for home use. The one I like, available in all good supermarkets, is from Peru and goes under the name Machu Picchu. Whether any of it is grown near that Inca architectural treasure, I cannot say, but the coffee is good — and recently it has been expensive. The discounts regularly offered by the supermarkets, which can knock a third or more off the recommended retail price, have been absent. It is enough to make you switch to water. I mention this because higher food and drink prices, partly driven by increases in commodity prices, helped push inflation higher, to 3.6 per cent last month. I have high hopes for future cups of coffee, though, because wholesale prices, which peaked in February and again in April, have come down quite sharply since then. But that does not mean we will soon see a sharp drop in inflation. Second-quarter inflation was a touch higher at 3.5 per cent than the 3.4 per cent expected by the Bank of England in its most recent monetary policy report in May, though some of that was due to an error in the April data. It expected then that inflation will trundle along at close to 3.5 per cent for a few months more, peaking at 3.7 per cent in September. A big increase in air fares, and the fact that petrol prices fell less last month than a year earlier, were enough to tick the rate up to 3.6 per cent last month. Markets are probably right to conclude that this will make next month's decision on interest rates by the Bank closer than it might have been, but also right to think that it will not get in the way of a cut in official interest rates from 4.25 to 4 per cent. The basis for this, unless the Bank has had a significant change of view, is that inflation will be back below 2.5 per cent in a year's time, and below 2 per cent in two years. The case for a rate cut was reinforced by the latest labour market statistics, which showed that its gradual softening continues and pay pressures are easing. Total and regular pay growth has slowed to 5 per cent, from nearly 6 per cent earlier this year, despite the potential upward pressure from a big increase in the national living wage in April. Private sector pay growth, most responsive to market pressures, is running below 5 per cent. The labour market statistics are an object lesson in not rushing to judgment. The headlines were generated by a rise in the unemployment rate from 4.6 to 4.7 per cent. But, as I have written before, it is important to take the unemployment and inactivity rates together. That 4.7 per cent unemployment rate in the March-May period was up from 4.4 per cent a year earlier. Over the same period, however, there was a much bigger fall in the inactivity rate — the proportion of people in the 16-64 age group unavailable for work — which dropped from 22.1 to 21 per cent. This explains why rising employment on the Labour Force Survey measure, including an increase of nearly 100,000 in self-employment over the latest 12 months, went hand in hand with a small rise in the unemployment rate. People who were economically inactive have been making themselves available for work. The number of economically inactive, just over nine million, is still high and above pre-pandemic levels, but is down by 400,000 from its peak early last year, which is good news. Another lesson in not rushing to judgment was provided by the Office for National Statistics in its latest release. A month ago, it said that payroll numbers had slumped by 109,000 in May. This was reported as something close to Armageddon in the labour market, a consequence of the increase in employers' national insurance (NI) announced by Rachel Reeves in her budget last October, which took effect in April. There was always something odd about that figure, which did not square with survey evidence, and sure enough, it has been revised down to just a 25,000 fall. Over April and May together, payrolls dropped by 49,000, which is more of a gentle deflating of the tyres than a blowout. Finally, when it comes to not rushing to judgment, some people were quick to describe the UK's situation following the release of the inflation figures as 'stagflation'. I realise that many doing so were too young to remember genuine stagflation. The term was invented by Iain Macleod, who became Tory chancellor in 1970 but sadly died a few weeks into the role. Stagflation was a popular description in the 1970s when the UK's inflation rate, based on the retail prices index, peaked at 26.9 per cent in 1975, at the same time as the economy was in recession (the stagnation bit of stagflation), an unusual combination. Inflation averaged 12.6 per cent in the 1970s and the unemployment rate was on its way to almost 12 per cent in the 1980s. We would have given our eye teeth then for inflation at 3.6 per cent, or 4.4 per cent on the retail prices index. The economy is not growing as fast as we would like, and the April and May monthly gross domestic product (GDP) readings were mildly disappointing, but there is no reason to talk it down by more than justified. Language matters. Just as it is silly to talk of recession if you have two consecutive quarterly falls in GDP, each of just 0.1 per cent, so it is silly to talk of stagflation when inflation is at current levels and the economy is merely continuing the slow growth pattern that set in a decade and a half ago. Above all, turning the dial up to 11 in these circumstance leaves no room for when and if things get really bad. They were quite bad for inflation three years ago, when the rate hit 11 per cent, and they were very bad for growth in 2020, when Covid-hit GDP fell by 10.3 per cent — its biggest drop since 1709. We are in calmer waters now and things are mildly disappointing, no more than that. • The deepest recession, but also easily the weirdest Chancellors are always guaranteed a polite reception when they deliver their annual speech at the Mansion House in the City, which these days is called the financial and professional services dinner. The last rumpus I can remember was when Gordon Brown turned up in a business suit, arguing that it was a working engagement so he was wearing working clothes. Everybody who has attended since is glad that he did. The old dress code of white tie and tails, which most of us don't have in our wardrobes, was uncomfortable, particularly on a hot evening. Rachel Reeves pressed most of the right buttons in her speech to the bankers, accountants, brokers, lawyers, financial advisers and others. She wants to cut the red tape currently applied by the regulators, soften some of the restrictions put on the banks in the wake of the financial crisis more than a decade and a half ago, and boost investment by retail investors in riskier but more productive assets. • Reeves tells regulators to loosen up to boost share investment Whether that includes a cut in the current £20,000 cash Isaallowance, as was mooted before her speech but did not make it into the final version, we shall see. The economics of this are quite straightforward. The cash Isa was introduced in 1999, replacing other tax-exempt savings accounts. At launch, the allowance was £3,000, where it remained for nearly ten years. It then rose gradually to £5,760 in 2013-14, before jumping sharply to £15,000 during 2014 and £20,000 in 2017-18, where it has remained. The period in which the allowance was rising sharply, as you will have noticed, was one of near-zero official interest rates, and paltry savings rates. A more generous allowance did not cost the Treasury much. But the return to more normal interest rates means the exchequer cost of the cash Isa has risen, to more than £2 billion in 2023-24. A lower allowance, as part of a strategy to encourage more retail investment in UK risk assets, is the right thing to do. Whether it will work, though, remains to be seen, not least because more equity investment need not be more investment in UK equities. As chancellor, you can press a lot of buttons and find that nothing much happens.
Times
3 hours ago
- Times
Business rates hike would drive up food prices, chancellor told
Rachel Reeves has been warned that a tax raid on retailers in the budget in October would fuel inflation and drive up food prices heading into Christmas. Helen Dickinson, chief executive of the British Retail Consortium (BRC), said that a planned increase in business rates for large stores and supermarkets would 'add to inflation at the worst possible moment'. Dickinson, whose members include more than 200 big retailers, said many businesses were 'already at breaking point' and dealing with the 'knock-on effects' of Reeves's decision to increase employers' national insurance by £25 billion a year from this April. She also linked the issue to the Bank of England base rate, which affects mortgages for millions of homeowners, stating: 'It risks pushing up prices just as families are hoping for relief, and at a time when the Bank of England is trying to bring inflation down.'
