Bank of England tipped to leave interest rates on hold; Shell profits drop – business live | Business

Greenpeace activists dressed as Shell board members have held a demonstration outside the energy giant’s headquarter this morning.

They conducted a mock Shell profits party behind a burning sign reading “Your Future”, to highlight the climate damage caused by fossil fuels.

Maja Darlington, Campaigner at Greenpeace UK, said:

“Fires are raging across Colombia, Britain has been wracked by floods, 2023 smashed global temperature records, but Shell is posting yet more obscene profits from climate-wrecking fossil fuels. While customers struggle with the cost-of-living crisis, Shell shovels over $20 billion to shareholders and drills for yet more oil and gas, climate disasters are multiplying and hitting hardest those who have done the least to cause the crisis.

“It’s time to end the fossil fuel party. It would take the average British worker over 640,000 years to earn as much as Shell did last year. Our government must make oil companies like Shell stop drilling and start using their immense wealth to pay for the damage they are causing, before all our futures go up in flames.”

Profits at oil giant Shell have dropped by almost a third, but that hasn’t stopped it announcing another share buyback scheme and lifting its dividend.

Shell has reported annual adjusted profits for 2023 of $28bn, 29% down from its record earnings of almost $40bn in 2022.

The drop in profits is due to lower oil and gas prices, lower volumes, and lower refining margins, Shell says.

In the last quarter of 2023, Shell made $7.3bn, up from $6.2bn in the third quarter of last year, but lower than the $9.8bn made in Q4 2022.

The oil giant has also announced a new share buyback programme of $3.5bn, and is also lifting its dividend by 4%.

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

These are tricky times for central bankers. Growth is being held back by high interest rates, while inflation is still over target despite falling back from the peaks of the last two years.

So the Bank of England has plenty to ponder, as it prepares to set interest rates at noon today.

The City are confident that the Bank will leave interest rates on hold at their current 15-year high of 5.25%. With inflation at 4% – twice the BoE’s 2% target – policymakers probably won’t feel confident easing policy.

The money markets reckon there’s a 99% chance that the Bank holds rates unchanged today, with a 1% possibility of a shock rise to 5.5%.

The Bank may also cut its forecast for inflation this year, while investors also expect the BoE to signal when rate cuts are likely to start this year.

Rates have been held at 5.25% since last August. But the nine members of the Bank’s monetary policy have been split at recent interest votes – with some hawkish members pushing for higher borrowing costs.

April LaRusse, head of investment specialists at Insight Investment, says:

“We don’t expect any change in UK rates tomorrow, but the vote is going to be fascinating. At the last meeting of the Monetary Policy Committee in December three members of the committee voted to increase interest rates to 5.5%.

A lot has changed since then; the US Federal Reserve have pivoted to a more dovish outlook and markets are now pricing in a series of UK interest rate cuts starting in May. With inflation now considerably below the Banks own forecasts we expect a shift in tone – but the Bank is going to face a tricky job to keep market perceptions on a realistic path.”

Last night, America’s Federal Reserve left interest rate on hold, while Fed chair Jerome Powell tried to cool expectations that the Federal Reserve would begin cutting interest rates as soon as March.

Powell insisted a March cut was not the Fed’s “base case”, seen as an indication that the Fed could delay easing monetary policy until May.

That, and jitters about the health of US regional bank New York Community Bancorp, knocked stocks in New York last night. It cut its dividend and posted a surprise loss, renewing fears over the health of similar lenders.

The S&P 500 index of US shares lost 1.6%, while the tech-focused Nasdaq Composite lost 2.2%. Google’s parent company, Alphabet, lost 7% after missing advertising revenue targets in its latest results.

Also coming up today

The UK Labour Party will be wooing business chiefs, and vice versa, today as it holds its largest ever business conference.

Around 400 senior business leaders will gather in London for speeches, panels and roundtables in central London, at an event where tickets sold out in just a few hours.

With a general election due within a year, Labour are expecting business leaders from companies such as Google, Shell, AstraZenaca, Airbus, and Goldman Sachs.

They hope the conference will demonstrate the party’s “commitment to work hand in glove with the business community” and will use it as an opportunity to reveal its business policy plans after two major industry reviews.

The agenda

• 8.30am GMT: Sweden’s central bank, the Riksbank, sets interest rates.

• 9am GMT: Eurozone manufacturing PMI report for January

• 9.30am GMT: UK manufacturing PMI report for January

• 10am GMT: Eurozone flash inflation reading for January

• Noon: Bank of England interest rate decision

• 12.30pm GMT: Bank of England press conference

• 1.30pm GMT: US weekly jobless data