Bank of England expected to leave interest rates on hold today; household water bills increase to be set – business live

Bitcoin took a lurch lower overnight, after Fed chair Jerome Powell said the US central bank has no desire to be involved in any government effort to stockpile large amounts of bitcoin.

Asked about the possibility that the US could create a strategic bitcoin reserve, Powell said:

“We’re not allowed to own bitcoin.”

In terms of the legal issues around holding bitcoin, Powell added:

“That’s the kind of thing for Congress to consider, but we are not looking for a law change at the Fed.”

This knocked bitcoin as low as $98,700 early this morning, down from $106,400 yesterday. It’s now risen back to $101,200.

Wall Street was rattled yesterday by a suprisingly hawkish message from the US Federal Reserve, alongside a cut to interest rates.

The S&P 500 share index tumbled almost 3%, after Fed policymakers raised their inflation estimates for next year and cut their own forecasts for rate cuts in 2025.

Fed chair Jerome Powell told reporters he remained optimistic about the US economy, saying:

“I think it’s pretty clear we have avoided a recession. I think growth this year has been solid.

“The US economy has been remarkable.”

Troubled Thames Water will be allowed to increase customer bills by just over a third by 2030 after a decision by the industry regulator, the Guardian has learned.

Ofwat is poised to announce that the heavily indebted company, which serves 16 million consumers in London and the Thames Valley area, will be permitted to raise bills by just over half the level the company had demanded.

Ofwat would allow Thames to raise bills by more than 33% over the next five years, far less than the 59% the company had requested, sources said.

The decision does, however, represent a softening in stance from Ofwat which had said in July that its preliminary view would be to allow Thames to increase bills by 22%, equivalent to a £99 increase in the average bill to £535 by 2030.

Here’s the full story:

Households in England and Wales are about to learn how sharply bills will rise over the next five years.

Water regulator Ofwat is expected to announce on Thursday that charges will increase by more than 20% over the next five years, to give utility companies the financial firepower to fix the pollution and water-shortage crisis hitting the UK.

Back in July, Ofwat issued a draft decision that water companies could increase bills by an average of 21%, on top of inflation, over the next five years. That would equate to an average £94 increase by 2030, to £535 a year.

But some water companies had subsequently asked to increase bills by an average of 40%, which would push average bills to £615 a year by 2030.

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

Borrowers are unlikely to receive a pre-Christmas present from the Bank of England today.

The UK central bank is widely expected to leave interest rates on hold at noon, at its final meeting of 2024.

According to the money markets, there is barely 1% chance of a cut, and almost 99% certainty that we’ll get a ‘no change’ decision as the clocks strike 12.

Yesterday’s jump in inflation to 2.6%, above the Bank’s target, following a pick-up in wages on Tuesday, has crushed any lingering hopes of a rate cut this month, even though the economy also appear to be weakening.

The past week has seen “a troika of bad economic news for the UK”, says Kathleen Brooks, research director at XTB, who explains:

Firstly, GDP fell for October, secondly, wage growth shot higher and thirdly, inflation is also moving in the wrong direction. Annual headline inflation rose to 2.6% from 2.3% in November, which was mostly down to expected base effects. Service price inflation remained steady at 5% YoY; however, this is still far too high for the BOE to be comfortable with. Pay growth is another concern.

Private sector pay growth was 5.4% YoY in October, which suggests that the consumer could thwart the BOE’s efforts to bring inflation back to the 2% target rate.

The Bank’s decision comes a day after the Federal Reserve cut US interest rates, but also signalled it expected to lower borrowing costs at a slower rate in 2025.

The agenda

• 7am GMT: Water regulator Ofwat to announce how much water companies can increase prices in the next five years.

• Noon GMT: Bank of England interest rate decision

• 1.30pm GMT: US jobless weekly claims data