Crypto News: A Table Mountain to climb

Where were we? When many sloped off into the summer holidays, the final Bank of England press conferences saw journalists feel able to start asking when rate hikes might come to an end. Now September brings new central bank decisions that could, as Sofia Horta e Costa says on Bloomberg's Markets Today live blog, "set the tone for the rest of the year."

In a speech in South Africa this morning, the BOE's Chief Economist Huw Pill obliged with a striking image to "set the tone," setting out the multiple paths that monetary policy could take in order to get inflation back to the central bank's 2% target.

One is more like the Swiss mountain Matterhorn, Pill said, where rates would rise quickly and steeply in order to restrict demand but then would fall rapidly as inflation dipped back to target. But the economist said he was more in favour of a Table Mountain path — referring to the flat-topped landmark that overlooks Cape Town. He added:

"Crucially, I think in the UK, it's more effective at ensuring that we see transmission through the two to five-year maturity rates that have become very central to the way the mortgage market and private borrowing operates."

What does this mean in practice? As Lucy White and Tom Rees write: "Money markets eased wagers on the scope for further interest-rate hikes. A quarter-point hike next month remains fully priced, but bets on the peak rate slipped to around 5.85%, down around 4 basis points from before Pill spoke."

Ambling around atop Table Mountain may sound sedate compared to more vertiginous increases but the political reality of rates plateauing for a while at a new elevated level is not good for this government.

Huw Pill, chief economist at the Bank of England Photographer: Hollie Adams/Bloomberg

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The stories you need to know about this evening

Britain's energy regulator approved new rules designed to ban generators from charging sky-high prices for power.
Euro-area inflation stopped slowing in August, presenting European Central Bank officials with a quandary.
Ukraine can join NATO once its borders are stable, the Czech Republic's envoy to the alliance said.
Ukrainian parliament may vote on the exit of Defense Minister Oleksii Reznikov as soon as next week.

A garlanded defence secretary who did a great deal for the UK and Ukraine, Ben Wallace left government this morning with an 8 a.m. tweet starting "That's all folks!" and was subsequently showered in deserved praise. His heavily trailed departure triggered a tiny reshuffle and now a familiar face — Grant Shapps — has stepped in to replace him. Visiting Ukraine this month, Shapps linked energy and defence and so appears to take with him to his new job a conviction that energy security is defence security.

The appointment is not without critics. Bloomberg's politics team highlights military sources questioning whether Shapps will continue Wallace's fight for more defence funding: "Shapps, despite a lengthy tenure in cabinet, lacks experience in defence, and steps into Wallace's shoes at a crunch moment for UK policy and Russia's ongoing war with Ukraine."

Grant Shapps Photographer: Chris Ratcliffe/Bloomberg

As well as this, the leapfrogging of Rishi Sunak's former special adviser Claire Coutinho quite a few rungs up the ladder to take over Shapps's previous position stands to be just as consequential for the coming years. Decisions being made by this government on energy security and net zero will ricochet around the international business and investment landscape for a good while as serious corporate players continue to transition to lower emissions.

Coutinho is the first of the 2019 intake to make it to cabinet to add more Sunak-esque, high-minded zeal for numbers, efficiency and reform. I've seen Coutinho up close as smart and sharp during her time working as Sunak's eyes and ears on the backbenches (as his PPS) when I worked in the Treasury. Her appointment today builds on Alex Chalk as justice secretary — Sunak incrementally transforming his government, coming up to its one year anniversary, into his own top team.

Coutinho's new department also has incoming fire. For those paying attention, the surprise Tory by-election win in Uxbridge off the back of bashing the ULEZ expansion appeared to bring the clumsy conclusion that voters want all climate and environment policies held in check. A great number of Tory backbenchers disagree.

It's into this fierce battle that Coutinho steps. And she gets no time to read in. Next week, the energy bill is the main action in parliament and as the cabinet minister in charge she will have to advise on where to respect inevitable backbench rebellion. It is going to require her to tread many fine lines, fast, between policy, political reality and principle. There will be occasions, where she will need to stand up to her long-time boss, the prime minister. I've seen her do this when I worked on the same team as her in No. 11 — gently and with class, and often successfully — but the stakes are much higher now and it is just a fact that her cabinet adversaries are more experienced.

A considerable number of Tory MPs are bewildered by the new oil and gas licenses — led by net zero expert Chris Skidmore; and impatient for a green light on onshore wind led by Alok Sharma, and backed up by former leader Liz Truss, no less. As well as this, Coutinho has to deal with net zero sceptics tabling scores of amendments. The chance to broker peace between green and un-green Tories is hers to take.

It may not be one of the government's five pledges but getting energy and net zero policy right is as hefty a portfolio as any in government in 2023. The critical view is that Sunak's administration is stalling years of UK leadership on energy and the environment. The kinder one is that he is repositioning his to be an Everything Energy policy — oil and gas but also nuclear, wind and solar. Which one it really is, and how cogently it is fashioned, will now be in Coutinho's fresh hands.

Photographer: Daniel Leal/AFP

On this week's In the City podcast, Karen Ward, EMEA chief market strategist at JP Morgan Asset Management and a key adviser to Chancellor of the Exchequer Jeremy Hunt, joins hosts Francine Lacqua and David Merritt to discuss why a UK recession is likely — and how the labor market is to blame.

They also unpack key points by central bankers who attended the Jackson Hole Economic Symposium, and what it all means for the BOE and the UK. For the latter, the answer is recession.

You can listen to the full episode on Apple podcasts or on Spotify.

Safe havens. Russians are the top buyers of properties from Dubai's biggest developer, Emaar Properties.

No end yet. The CBI said said a year-long slump across the private sector is likely to continue for at least three more months.

'Everything app'. Users of X, the social network formerly known as Twitter, will be able to make video and audio calls through the platform.

$7 billion

French billionaire Francois-Henri Pinault is close to a $7 billion deal to buy a majority stake in Creative Artists Agency.

One key story, every weekday

Shell Plc has walked back its once-ambitious plans to develop millions of carbon offsets projects around the world. Photographer: Krisztian Bocsi/Bloomberg

Shell set out to solve one of the most pressing problems with carbon offsets: Most don't deliver the environmental benefits they promise. Surely with deep pockets and a century of engineering expertise, Shell thought it could do better. What it learned from its efforts turned out to be an even more damning indictment of one of the corporate world's favorite "climate solutions."

Read The Big Take.

Allegra Stratton worked for Prime Minister Rishi Sunak when he was chancellor and runs an environmental consultancy, Zeroism.

Please send thoughts, tips and feedback to readout@bloomberg.net. You can follow Allegra on Twitter.

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