FirstFT: Jeremy Hunt says ‘reasonable chance’ that Bank of England will cut rates next year

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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

Good morning.

Jeremy Hunt has raised the prospect of the Bank of England reducing interest rates in 2024, saying a cut would be a crucial moment in shifting the economic mood in what is expected to be an election year.

The UK chancellor said in an interview with the Financial Times that 2024 was “when we need to throw off our pessimism and declinism about the UK economy”.

Asked if people would feel better off by the end of next year, Hunt said: “There’s a reasonable chance that if we stick to the course we’re on, we’re able to bring down inflation, the Bank of England might decide they can start to reduce interest rates.”

“That probably is the moment when people will begin to have more confidence about their own personal prospects and the prospects of their family,” he added.

The chancellor’s comments came after official data on Wednesday showed a steep dive in the rate of consumer price growth to 3.9 per cent in November. Read the full story.

For more on rate-setters’ battle with inflation, premium subscribers can sign up for our Central Banks newsletter by Chris Giles, or upgrade your subscription here.

Here’s what I’m keeping tabs on today and over the weekend:

• Economic data: Today, the UK publishes November retail sales figures and final third-quarter gross domestic product. In the US, the core personal consumption expenditures price index, preferred by rate-setters, is expected to have eased again in November.

• UK: Financial markets will close early today for the Christmas break.

• Vatican City: Pope Francis will lead Midnight Mass at St Peter’s Basilica on Sunday.

Thank you for reading FirstFT this year. We’re taking a short break but will be back in your inboxes next Tuesday, December 26. Happy holidays!

Five more top stories

1. Exclusive: Morgan Stanley’s James Gorman says markets will “take off” as the US Federal Reserve turns to interest rate cuts. The bank’s outgoing chief executive told the FT that the banking system had become much safer in his 14-year tenure, leaving “their own stupidity” as one of the biggest threats still facing banks. Read the full interview.

2. Exclusive: KPMG partners in Dubai raised concerns about a $1.5mn review by lawyers at Freshfields, which was announced in July 2022 after the FT reported allegations of nepotism by the firm’s then-boss in the United Arab Emirates, Nader Haffar. Here are the board members’ complaints.

3. Joe Biden has called for an investigation into Nippon Steel’s purchase of US Steel on national security grounds, despite Japan’s status as one of Washington’s closest allies. The proposed $14.9bn acquisition of what the White House called an “iconic American-owned company” has sparked a bipartisan backlash in Washington, posing a political dilemma for Biden.

• Opinion: However ugly US steel-state politics are on the eve of an election year, leveraging mistrust of Japan is a perversely odd strategy, argues Leo Lewis.

• US-Japan ties: Japan plans to ease weapons exports curbs to allow several dozen domestically produced Patriot air defence missiles to be shipped to the US.

4. Exclusive: Failed partnership talks with Warburg Pincus have revealed the scale of BlackRock’s private equity ambitions. While discussions began nearly two years ago, the conversation foundered over competing visions, according to people briefed on the talks. BlackRock is still searching for an acquisition to bolster its profile in private funds. Here are more details from the talks.

5. Lower public spending is set to curb eurozone economic growth next year as the bloc moves into an era of budget restraint, putting pressure on rate-setters to loosen monetary policy, according to economists. Here’s more on how new EU fiscal rules will affect different member countries.

How well did you keep up with the news this week? Take our quiz.

The Big Read

Joe Biden’s warning to Israel that it was losing global support for its “indiscriminate” bombing of Gaza did not signal a fundamental rupture with the Jewish state. But the US president’s reproach did point to the mounting frustration in Washington as the death toll of Palestinian civilians mounts. The growing disquiet suggests trouble for Biden, too, on both domestic and international fronts.

We’re also reading . . . 

The Financial Times’ award-winning podcast series Hot Money is back. Season two investigates a mysterious murder in a small town that leads to a web of drugs, money laundering and state-sponsored assassinations stretching from Dublin to Dubai. Listen on Apple Podcasts, Spotify or wherever you get your podcasts.

Chart of the day

It has been a painful year for investors betting on the green transition, with clean energy stocks lagging behind an oil and gas sector buoyed by higher fossil fuel prices since Russia invaded Ukraine. But there are still plenty of options to align portfolios with the world’s push for cleaner energy.

Take a break from the news

What began as a resolution to see more of the US snowballed into seeing it all. From Alabama to Wyoming, the FT’s Joshua Franklin completed the quest to visit all of America’s 50 states — part of a rising phenomenon of “completist” travel.

Additional contributions from Benjamin Wilhelm and Gordon Smith