Labour MP Dame Meg Hillier, who chairs the Treasury committee, begins today’s session by asking the Bank of England about this month’s decision to cut interest rates, from 5% to 4.75%.

Q: What tipped the balance on your decision?

Governor Andrew Bailey says he voted to cut borrowing costs due to the “pace and progress on disinflation”, which has been faster than expected – with inflation dropping below target to 1.7% in September.

Bailey says the Bank also flagged that it emphasises the word ‘gradual’ when looking forwards, due to the various risks to inflation.

Deputy governor Clare Lombardelli says the dominating factor for her vote to cut rates was the drop in inflation, and the fall in services inflation, and in wage settlements.

Taken together, that suggests the drivers of inflation were less strong than in the past.

But, Lombardelli warns, there are “risks on both sides” on the inflation outlook.

Professor Alan Taylor says he’s “broadly in agreement” with Bailey and Lombardelli.

Taylor says that historical patterns show that energy shocks feed into some sectors quickly – such as goods and foods – but arrive later in other sectors. What’s happening in the UK isn’t abnormal, Taylor says, but there is still the possibility that inflation beomes embedded.

But as inflation has been lower than forecast, that gave “reassurance” that it was OK to make a second cut to interest rates.

Catherine Mann, who opposed the rate cut, says she looks at the data in a slightly different way. She points out that recent earnings growth was higher than the Bank had forecast back in August, and that wage settlements are running higher than is compatible with hitting the Bank’s 2% inflation target.

Forward-looking measures of future prices and wages have been over target for the last four months, and haven’t fallen, Mann adds – that’s a sign that inflationary expectations may be higher than the Bank would like.

Over in Westminster, top officials from the Bank of England are appearing before the Treasury Committee.

Governor Andrew Bailey is in the hot seat, flanked by the new boy on the Monetary Policy Committee, Alan Taylor, plus deputy governor Clare Lombardelli, and Catherine Mann.

Mann is the most hawkish member of the monetary policy committee – the only one to oppose this month’s cut in UK interest rates, to 4.75%.

The committee point out that this is their first session with the Bank since the July general election (s well as last month’s budget).

They say:

MPs are likely to ask witnesses about the current economic picture and how it affects the Bank’s interest rate decisions, particularly in relation to the measures announced in the Chancellor’s 2024 Autumn Budget.

MPs may also choose to probe the Bank’s plans for unwinding its QE portfolio and the most recent pay and jobs figures, including the continued issues with the reliability of official data.

A shiver of fear just rippled through the financial markets, after Vladimir Putin approved an updated Russian nuclear doctrine today.

Kremlin spokesperson Dmitry Peskov has said the use of western non-nuclear missiles by the Ukrainian armed forces against the Russian Federation under the new doctrine could lead to a nuclear response.

The warning came after US president Joe Biden gave approval for Ukraine to strike targets within Russia with US-supplied long-range missiles.

And there are reports that Ukrainian armed forces have carried out their first strike in a border region within Russian territory with a ATACMS missile, according to news agency RBC Ukraine.

This has triggered a flight to safety, with investors piling into the US dollar, the Swiss franc and the Japanese yen. The British pound is down half a cent against the dollar, at $1.262.

US and European bond prices are also jumping, pushing down government borrowing costs. But Ukraine’s bonds are falling, having rallied earlier this month on hopes that Donald Trump might end the war with Russia.

Equities are dropping, with the FTSE 100 share index down 40 points or 0.5% at 8067 points, with bank stocks among the fallers.

And the Euro stoxx volatility index – a measure of fear in the markets – is up 1.3 points to 19.1 points.

Rachel Reeves is feeling pressure from farmers, as well as retailers, over the tax changes in last month’s budget.

Thousands of farmers are descending on central London this morning, arguing that changes to inheritance tax rules will destroy family farms. The government, though, says it will make no difference to food security.

My colleague Joanna Partridge is attending an event organied by the National Farmers Union, where emotions are running high, and reports:

Room full of farmers in London attending @NFUtweets mass lobby event to protest against government budget changes to inheritance tax.
NFU President Tom Bradshaw called it a “extraordinary” betrayal pic.twitter.com/kQsDk49lJO

— Joanna Partridge (@JoannaPartridge) November 19, 2024

NFU President Tom Bradshaw welled up just a couple of minutes into his speech to farmers and paused as overcome with emotion. “Good for you” came a shout from a farmer in the audience. pic.twitter.com/q9cSvZzpnt

— Joanna Partridge (@JoannaPartridge) November 19, 2024

Sue and William Hosegood, dairy farmers from Devon with 3 sons working on the farm, have come to London to protests against budget changes to inheritance tax. pic.twitter.com/bTxrBB8leA

— Joanna Partridge (@JoannaPartridge) November 19, 2024

Our Politics Live blog is tracking all the developments:

Staff have resigned at Starling Bank after its new chief executive demanded thousands of workers attend its offices more regularly, despite lacking enough space to host them.

In his first major policy change since taking over from the UK digital bank’s founder, Anne Boden, in March, Raman Bhatia has ordered all hybrid staff – many of whom were in the office only one or two days a week, or on an ad-hoc basis – to travel to work for a minimum of 10 days each month.

But the bank, which operates online only, admitted that some of its offices would not be equipped to handle the influx.

An email sent by Starling’s human resources team and seen by the Guardian said:

“We are aware that in some office locations we may not be able to accommodate 10 office working days per month for everyone right now. We are considering ways in which we can create more space,”

Starling has 3,231 staff, the vast majority of whom are in the UK with some also in Dublin. However, the Guardian understands that the bank has only about 900 desks, including 260 at its Cardiff site, 320 in its London headquarters and 155 in Southampton.

More here:

Consumer goods giant Nestlé has announced plans for 2.5bn Swiss francs (£2.2bn) of cost cuts, to fund a new ‘action plan’ to drive sales and boost its share price.

Nestlé’s new CEO, Laurent Freixe, says he wants to “unlock the full potential” of the company’s portfolio – which includes chocolate bars such as KitKat and Aero, breakfast cereals, and coffee brands including Nespresso and Nescafe.

Freixe’s action plan includes “targeted” investments in Nestlé’s winning brands, addressing problems at its underperforming divisions, and more investment in advertising and marketing – funded by those cost cuts.

Nestlé’s also plans to spit off its water and premium beverages activities as a global standalone business.

Freixe says:

“Nestlé is a strong company with global reach, exceptional demand generation and in-market capabilities. We have a diverse and strategically well-positioned product portfolio. Our iconic brands and innovative products connect with people every day, at every stage of their lives.

These strengths give us a unique advantage and position us to win in the marketplace. We will now invest further in our brands and growth platforms to unlock the full potential of our products for our consumers and our customers.

A global trade war could also drive up inflation, and interest rates, if Donald Trump pushes on with his plans to impose new tariffs, and other countries retaliate.

The International Monetary Fund (IMF) has warned today that “tit-for-tat” tariffs could raise costs and disrupt supply chains.

Speaking at a forum in Cebu, in the Philippines, IMF Asia-Pacific Director Krishna Srinivasan warned it could also undermine Asia’s economic prospects.

Srinivasan said:

“The tit-for-tat retaliatory tariffs threaten to disrupt growth prospects across the region, leading to longer and less efficient supply chains.”

The recent rise in UK mortgage rates will probably also be raised by MPs when they grill the Bank of England this morning.

A string of high street lenders have pushed up mortgage rates modestly in recent days amid expectations of higher inflation – partly due to measures in the budget.

Sir Keir Starmer, though, has denied that the budget is to blame for a recent rise in mortgage rates.

Speaking to journalists as he travelled to the G20 summit in Rio, the PM said:

“What we have done with the budget is to stabilise the economy and that, in my view, was the essential first step.

“As a result of that, the forecasts are for interest rates to go down, inflation to go down – you saw the figures around the budget.”

Starmer added that mortgage rates were “individual decisions for the banks, but the interest rates will be coming down”.

Interest rate are indeed forecast to come down, but not quite as quickly as hoped earlier this autumn. Currently, the money markets expect rates – currently 4.75% – will drop to 4% by next December. Before the budget, they were forecast to drop to 3.75% by the end of 2025.

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

Some of Britain’s largest retailers are crying foul over the government’s plan to raise their national insurance contributions, warning that it will cost jobs and drive up prices.

More than 70 businesses have signed an open letter to Chancellor Rachel Reeves, saying the changes the employers’ NICs contributions – plus the higher minimum wage and a packaging levy – mean price hikes are a “certainty”, and will cost the retail sector more than £7bn each year.

They warn that retailers cannot absorb such significant cost increases quickly by making efficency savings or eating into profits. Instead, they’ll be forced to take dfficult decisions such as lifting prices, offering lower pay rises, cutting staff and closing stores.

The letter is signed by major retailers including Tesco, Asda, Sainsbury’s, Aldi, Amazon UK, Boots, Lidl, JD Sports, Primark, Morrisons and Greggs.

In it, they warn:

“We appreciate Government’s focus on improving the fiscal situation and investing in public services; we also recognise the role businesses have in supporting this.

But, the sheer scale of new costs and the speed with which they occur create a cumulative burden that will make job losses inevitable, and higher prices a certainty.”

In last month’s budget, Rachel Reeves increased the rate on employer’s NI contributions (NICs) from 13.98% to 15% from April 2025, and lowered the threshold at which they pay NICs on employees earnings to £5,000 from £9,100.

The plan is forecast by the government to raise £25bn per year.

Marks & Spencer warned that the measure in the budget could cost it more than £60m next year, while Asda expects a £100m cost.

Hospitality businesses have already warned that they will have to slash jobs and investment, or close, due to the increase in NICs.

The issue of higher national insurance contributions will be on the agenda at parliament later this morning, when the Treasury Committee will question the Bank of England Governor, Andrew Bailey.

MPs will also hear from three members of the BoE’s Monetary Policy Committee --- deputy governor Clare Lombardelli, professor Alan Taylor and Dr Catherine Mann.

The committee say they’re likely to ask about the current economic picture, and how the measures announced in the Chancellor’s 2024 Autumn Budget will affect monetary policy.

The Bank’s plans for unwinding its QE portfolio, the most recent pay and jobs figures, and the continued issues with the reliability of official data, may also come up…

The agenda

• 10am GMT: Eurozone inflation report for October (final reading)

• 10.15am GMT: Treasury committee hearing with the Bank of England

• 1.30pm GMT: US building permits and housing starts data