The City was caught on the hop yesterday after it emerged one member of the Bank of England's Monetary Policy Committee voted for a cut in interest rates this month and no one wanted an increase, reports the Independent .
David Blanchflower, the Dartmouth College labour economist, called for a quarter-point reduction to 5% - the first time a member of the nine-strong committee has voted for a cut since May last year.
He argued there was considerable evidence of spare capacity in the labour market and wage pressures were benign.
"The degree of monetary tightening, in conjunction with benign wage inflation, had started to push down consumption and housing market activity," he said, adding the service sector was looking weaker and inflation was likely to decline faster in the short term than in the MPC's central projection.
But he was outgunned by his eight colleagues, including the Bank's governor Mervyn King, who elected to freeze rates at 5.25% for a second month, says the paper.
"For most members, the financial market volatility added to the case for holding rates this month," the minutes said. "An unexpected move by the committee could provide an unwelcome addition to the uncertainty and volatility."
ABN AMRO shareholders could receive as much as £11bn in cash under the Dutch group's proposed merger with Barclays, says the Daily Telegraph.
Analysts expect Barclays to make an offer which values the Dutch bank at £44bn and to deliver around 15% in cash. However, Mark Thomas, an analyst at Keefe Bruyette & Woods, said: "Barclays may be able to increase the cash share to 25%."
A large cash element could satisfy ABN shareholders while ensuring Barclays investors retain the larger slice of the merged entity.
But Barclays may have to negotiate with regulators if it wants a large cash element, as both Barclays and ABN have low capital reserve ratios, limiting the cash available.
MORGAN STANLEY became the latest Wall Street firm to unveil record quarterly profits yesterday when it announced strong trading gains and a jump in investment banking fees had helped to push net income up by 70% in the first quarter, says the Times.
A dramatic rise in risky trading bets in the first quarter paid off with surges in revenue from share and bond trading, which helped to lift net income from $1.57bn (£801m) to $2.67bn for the three months to 28 February.
The so-called value-at-risk — an estimate of how much a firm potentially could lose in a bad day’s trading — jumped to $90m in the first quarter, from $58m the year before, as traders responded to calls from John Mack, chief executive, to take more risks.
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