Good morning. This article is an on-site version of our FirstFT newsletter. Sign up to our Asia, Europe/Africa or Americas edition to get it sent straight to your inbox every weekday morning
All eyes are on the US Federal Reserve today as it is set to announce a pivotal decision on whether to press ahead with interest rate rises amid the worst banking turmoil since the 2008 financial crisis.
Chair Jay Powell had at the start of the month floated the idea of speeding up the pace of rises back to a half-point increase. But in a sign of just how much the recent bank failures have altered the Fed’s calculus, policymakers are now debating whether to raise rates by a quarter point — the move most analysts expect — or not at all.
The European Central Bank stuck to plans to increase rates by half a percentage point last week. Former central bankers are split on what its US and British counterparts should do. Some say the banking scares should be a “wake-up call” on the impact of increasing borrowing costs, while others warn of entrenching inflationary pressures.
Ahead of the Bank of England’s decision tomorrow, Charles Goodhart, a former member of its monetary policy committee who warned early of the surge in inflation, said “it would be quite wrong to pause” in the UK as the move would prompt suspicions of hidden problems in banks.
Chancellor Jeremy Hunt has also said the BoE should stay focused on taming “dangerously high” inflation which also remains the government’s “first priority”.
Two other pieces that flesh out the dilemma over monetary policy:
Here’s what else I’m keeping tabs on today:
Thanks for reading FirstFT. Have feedback on today’s newsletter? Let us know at [email protected].
Five more top stories
1. UBS is set to enter talks with Michael Klein to unwind the First Boston deal, which would have seen the Wall Street dealmaker take control of much of Credit Suisse’s investment bank. Read more on why UBS is making the move.
2. Plans to raise the UK state pension age to 68 have been delayed amid falling life expectancy and warnings from Tory MPs that the move could provoke a backlash from middle-aged voters. Here’s why the plan is highly controversial.
3. First Republic has hired investment bank Lazard to help it explore strategic options after the lender’s shares collapsed in the wake of Silicon Valley Bank’s implosion. Lazard joins JPMorgan Chase and McKinsey in advising the struggling bank.
4. Russia is overhauling how it taxes oil companies to bolster state revenues by capturing a bigger share of crude sales, which often exceed the G7-imposed price cap on the country’s exports. The change reflects a growing rivalry between the Kremlin and oil producers over potential additional revenue.
5. Switzerland has banned Credit Suisse from paying deferred bonuses awarded before 2022 because taxpayer funds were used to facilitate its $3.25bn takeover by rival UBS. But bonuses for last year will still be allowed to avoid affecting staff that “did not themselves cause the crisis”.
The Big Read
No individual can encapsulate the whole bloody story of Russia’s war on Ukraine. But grain giant Nibulon comes close. A pioneering company that helped turn Ukraine into the “breadbasket of the world”, it is also an example of how the Russian invasion has thwarted the country’s economic potential and undermined its ability to establish itself as a thriving democracy.
We’re also reading . . .
Chart of the day
Two days after it agreed to spend $3.25bn to rescue Credit Suisse, UBS’s executives have started trying to move past the risks and sell investors on the benefits of the shotgun marriage. Here’s how the Swiss bank could reshape its defunct rival’s units in a takeover that will create the world’s fourth-largest bank by assets.
Take a break from the news
From the politics of food and the origin of time to the war on Ukraine and the realities of crime fiction, this year’s FT Weekend Oxford Literary Festival offers hundreds of stimulating and thought-provoking events. The 26th edition runs from March 25 to April 2.
Additional contributions by Gordon Smith and Emily Goldberg
Thank you for reading and remember you can add FirstFT to myFT. You can also elect to receive a FirstFT push notification every morning on the app. Send your recommendations and feedback to [email protected]
