Experts at Investec believe that the Bank of England will stand pat on rates when it meets this week due to financial stability concerns triggered by the collapse of Silicon Valley Bank and bailouts for Credit Suisse and First Republic Bank. “The degree of conviction in this view is necessarily small when inflation is still in double-digits but stability concerns have suddenly surged,” they said. Inflation data out on Wednesday on the other hand was expected to decline to just below 10%, posing a dilemma for Bank. Yet senior Treasury officials think the rate of inflation could halve to roughly 5% over the next few months. Similarly, the Office for Budget Responsibility sees inflation tumbling to 2.9% by the end of 2023. – Financial Mail on Sunday
Virgin Media O2 is studying a takeover offer for rival broadband supplier Cityfibre of up to £3bn. Virgin Media 02 parent company Liberty Global boss, Mike Fries, and Cityfibre head Greg Mesch, have already held initial talks about a possible tie-up. Cityfibre already reaches approximately 2.0m homes will full fibre brodband and hopes to reach 8.0m by 2025. An acquisition would help Virgin Media both expand its own network and help it hit its own target of upgrading the entirety to full fibre. One source said that Cityfibre, which enjoys the backing of Goldman Sachs, might fetch a price tag of over £3bn. – The Sunday Telegraph
Sparta Capital, a hedge fund set up by a former executive of US outfit Elliott Advisors, has taken out a stake in THG. It joins another activist investor on THG’s shareholder register, Kelso. The latter is expected to be close to making its recommendations to THG’s board public and is expected to push for the online retailer to move its shares to the premium segment of the main market. – The Sunday Times
The country’s lenders have been told by Bank to disclose their exposures to global dent markets. At a meeting last week, officials at Threadneedle Street held talks with lenders, both large and small, to assess their risk profiles and asked them to provide breakdowns of their bond market investments. Also discussed was whether they had any direct exposure to Credit Suisse, which was understood to be minimal. The intervention was only a precautionary action and did not reveal any immediate threats to the UK financial system. Nonetheless, the unusual intervention was a reflection of the degree of concern sparked by the failure of SVB and the situation at Credit Suisse. – Sunday Telegraph
Former top Bank of England official David Blanchflower believes that the central bank should slash interest rates and stop selling Gilts in the aftermath of the turmoil in the banking sector. Blanchflower, who sat on the BoE’s Monetary Policy Committee during the 2008 crisis, recommended cutting Bank Rate by 100 basis points to 3% at next Thursday’s policy meeting. Blanchflower and fellow economist Richard Murphy said in a submission to the Commons Treasury select committee that Bank should resume Gilt purchases at a pace of £50bn per year in order to keep the economy out of recession. – Guardian
