LONDON’S BUSINESS NEWSPAPER
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MARK KLEINMAN THE COLUMN THAT GETS THE CITY TALKING P8
FED STAYS THE COURSE WITH HIKE
THURSDAY 23 MARCH 2023
ISSUE 3,955
CITYAM.COM
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EYES TURN TO BAILEY AFTER STATESIDE RATE HIKE JACK BARNETT THE US Federal Reserve yesterday looked past the ongoing wobbles in the global banking system and hiked interest rates for the ninth time in a row, extending its aggressive fight against inflation. Chair Jerome Powell and the rest of the federal open market committee (FOMC) bumped the world’s most important interest rate 25 basis points higher to a range of 4.75 per cent and five per cent. The move signals the Fed is more concerned about stopping inflation from sticking around than easing pressure on the global banking network that has seen Credit Suisse, one of the oldest financial institutions, sold off to
its main rival UBS in a shotgun marriage over the weekend. US inflation has been steadily falling since its summer peak of more than nine per cent and is now running at 6.4 per cent, although core inflation remains stubbornly high, luring the Fed into its latest hike. The inflation fight still has a “long way to go and is likely to be bumpy,” Powell said. However, as a result of the banking volatility tightening credit conditions, thereby doing some of the Fed’s work, Powell said “ongoing” rate increases will no longer be necessary, although “some additional policy firming” could be. Powell and co’s resolve to keep inf lation d o w n sets the
scene for Bank of England governor Andrew Bailey and his team of rate setters, who will announce their rate decision at midday today. Markets reckon the monetary policy committee (MPC) will also kick UK interest rates 25 basis points higher to a post-financial crisis high of 4.25 per cent. Such a move would mark the eleventh time in a row the MPC has tightened policy, but would be a climb down from a series of at least 50 point increases. Numbers out from the Office for National Statistics yesterday showed UK inflation is running at 10.4 per cent, above the Bank of England and City’s expectations and the highest in the rich world. Core inflation – a more accurate measure of underlying price pressure – jumped to more than six per cent, while food prices rose by more than 18 per cent over the last year.
A HAIR-RAISING EXPERIENCE Former PM defends gatherings JESSICA FRANK-KEYES A DEFIANT Boris Johnson yesterday insisted he “did not lie to the House” and claimed a boozy leaving do was “essential for work” in a fiery evidence session set to determine his political future. Johnson underwent a fierce grilling in parliament yesterday as MPs aimed to decide if he misled, intentionally or recklessly, the Commons over the partygate saga. The former prime minister said he was “misremembering” when he said
rules had always been followed and called the inquiry “manifestly unfair”, even displaying flashes of anger. After taking a Bible oath, he swore to MPs: “I am here to say to you, hand on heart, that I did not lie to the House.” Raising a toast surrounded by alcohol at a leaving do for communications chief Lee Cain was, he said, “not only reasonably necessary but it was essential for work purposes”. £ FULL REPORT ON PAGE 11
City brokers Finncap and Cenkos Securities set to merge in all-share deal ANNA MOLONEY RIVAL brokers Finncap and Cenkos Securities are reportedly in advanced talks to merge in an allshare deal that could be announced as soon as this morning. If it goes ahead, the tie-up, first reported by Sky News’ Mark
Kleinman late last night, could create the City’s biggest dedicated investment bank for small-cap growth companies. The tie-up comes amid a challenging backdrop for City brokers, with a widespread slump in capital markets hammering profits throughout the sector.
Cenkos recently reported a £2.24m loss for the full-year, down from a £3.4m profit a year ago, while Finncap swung to a £2.59m half-year loss in December as flotations dried up. The share price of both Londonlisted brokers have suffered accordingly, with shares in Finncap
and Cenkos falling 59 per cent and 49 per cent over the last year respectively. Finncap, with a market capitalisation of £21m, will acquire Cenkos Securities, worth £22m, Sky News understands. The news comes months after fellow City broker Panmure Gordon
abandoned a bid for Finncap due to an inability to reach a price agreement. Finncap and Cenkos Securities were not immediately available for comment when contacted by City A.M. £ KLEINMAN’S TAKE: PAGE 8
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