Crossrail to finally open; German exports to Russia plunge; climate protests at Barclays AGM – as it happened | Business

Ahead of the Fed decision later, here’s a round-up of today’s stories.

And some great reading ahead of Bank of England day tomorrow:

UK lawyers will still be able to service Russian clients despite the UK’s ban on service sector exports, my colleague Jasper Jolly reports:

Since well before the latest invasion of Ukraine there has been widespread support in parliament, including from Conservative party MPs, for measures to prevent London companies from being “enablers” to Russian companies that play an important role in supporting Vladimir Putin’s regime.

Yvette Cooper, the shadow home secretary, told parliament in March it was “shameful” that Russian companies could “launder their money and their reputations through our capital city”, pointing to “an industry of enablers”.

However, it is understood that the measures will not affect the legal profession or other important services sectors such as software development and cloud services.

That means law firms will be free to continue to serve Russian clients. In some cases lawyers may even be able to serve clients who are subject to sanctions under licences provided by the Treasury.

Here’s his full story:

Leading anti-corruption campaigner Bill Browder has welcomed the UK’s ban on service sector companies working with Russia, calling it ‘big and welcome news’:

Browder, a prominent critic of Russian president Vladimir Putin, sucessfully lobbied for the Magnitsky Act. It allowed the US to sanction Russian officials responsible for the death of Browder’s tax lawyer Sergei Magnitsky, who died in a Moscow prison in 2009 after uncovering a $230m fraud.

Browder has also called for the US to issue visa bans against British lawyers who worked with Russian oligarchs, using the UK legal system against journalists and whistleblowers.

Iain Wright, managing director, reputation and influence at accountancy body ICAEW, said many firms had already cut ties with Russia:

“The UK government has announced a further package of sanctions aimed at demonstrating to the Russian elite the political and financial costs of their aggression against Ukraine.

“Many of our individual members and member firms have already taken proactive steps to disengage as appropriate with Russia. ICAEW is confident that chartered accountants, whether in practice or in business, will be ready and willing to play the fullest possible role in making these further measures effective.”

US stocks have now dropped into the red, with the tech-focused Nasdaq index down 1% ahead of today’s decision from the Fed.

Growth across the US services sector has slowed, adding to concerns over the global economy, as firms continue to be hit by surging prices.

The Institute for Supply Management’s non-manufacturing activity index has dropped to 57.1 last month, from 58.3 in March, showing weaker growth than expected.

Services firms reported that new order growth slowed, and that they had cut jobs.

A measure of input prices hit a record high, due to soaring commodity and energy prices, and rising wages.

Helpfully, the ISM also tell us what survey respondents are saying – with many citing rising prices, problems hiring staff, and supply chain woes.

Here are a few examples:

• “Pricing pressures and product availability issues continue to be extremely problematic.” [Accommodation & Food Services]
• “Large construction projects have been mostly constrained due to continued supply chain issues and large cost increases. Continued shortages in account management continue to be a source of frustration for day-to-day operations and service.” [Educational Services]
• “Overall business has softened.” [Information]
• “Continued delays due to supply chain logistics issues; increased pricing across the board.” [Retail Trade]
• “Fuel and chemicals continue to go up in price.” [Utilities]
• “Cost pressures beginning to slow demand.” [Wholesale Trade]

Wall Street trading has begun cautiously as traders wait for the Federal Reserve to set US interest rates later today (2pm New York, or 7pm BST).

The S&P 500 stock index has gained 8 points, or 0.2%, in early trading to 4,184 points.

Energy and materials stocks are up, following the jump in the oil price after the EU proposed a phased embargo on Russian oil. US crude is now up over 4% at $106.65 per barrel.

The Fed is expected to raise its target borrowing rate by 50 basis points, the first half-point rate rise since 2000, as it tries to pull US inflation down from a 40-year high of 8.5%.

That would lift the fed funds target rate range to 0.75% to 1%. In March, the Fed lifted rates by a quarter-point, up from almost zero.

Matthew Ryan, senior market analyst at Ebury, says a 50-basis hike now looks like the ‘bare minumum’ (rather than the ‘usual’ 25bp move).

Speaking during an IMF panel of central bankers last month, FOMC chair Jerome Powell stressed that it was ‘absolutely essential’ to restore price stability, and that rates would need to be raised ‘expeditiously’ in order for the bank to reach its goals.

Markets have subsequently ramped up bets in favour of an aggressive pace of US hikes this year, with fed fund futures now pricing in more than 250 basis points of tightening by year-end. With such an aggressive pace of hikes already priced in by markets, we think that the bar for a hawkish surprise from the Fed is now very high.

“A 50-basis point hike will be seen as the bare minimum – we think that it is a nailed-on certainty.

Speaking of central banks… it’s 25 years this week since the Bank of England was given control over UK interest rates, after the Labour party won the 1997 election.

Our economics editor Larry Elliott has written about how the move was dramatically revealed. Here’s a flavour:

Gordon Brown had a surprise in store for Eddie George when he summoned the then governor of the Bank of England to a meeting at 11 Downing Street on bank holiday Monday, 25 years ago this week.

For the past two years, Labour’s new chancellor had been working on a plan to give Threadneedle Street the right to set interest rates and now he was ready to tell George about it. Secrecy was complete. The first the City heard of the idea that henceforth it would be the Bank’s job to hit the government’s inflation target, was when it was announced 24 hours later.

Accompanying George was his private secretary Andrew Bailey, since elevated to the governor’s office himself. Bailey was there to see George’s surprise at Brown’s news – but now he has to steer the Bank through its trickiest time since independence. The annual inflation rate is 7% – its highest in three decades – and is set to move even further away from the official 2% target. The City expects the Bank to raise borrowing costs to 1% on Thursday – the fourth time in a row it has raised rates.

Speaking before the quiet period when the Bank avoids public pronouncements about the looming interest rate decision, Bailey said nobody at Threadneedle Street had seen Brown’s independence announcement coming.

“It had, of course, been mused on as a concept for some years – but the idea that the New Labour government would implement it, immediately surprised almost everyone, I think,”

Bailey recalled Brown producing a letter outlining his plans.

“Eddie, of course, was very supportive of the decision – and the famous letter now sits in the Bank of England’s museum. Though I confess it is not in mint condition, as for a number of weeks after Gordon handed it over, it went around in my briefcase.”

Here’s the full story:

India’s central bank announced a surprise interest rate rise today, in the latest sign that surging inflation is forcing policymakers to tighten policy.

The Reserve Bank of India’s monetary policy committee raised the key lending rate by 40 basis points to 4.4%, up from the record low of 4% set in the pandemic.

RBI governor Shaktikanta Das made the surprise announcement during an online media briefing on Wednesday.

The BBC has more details:

The decision came amid soaring prices of food and fuel, with inflation at an 18-month high and higher global prices filtering through into India.

“Inflation-sensitive items relevant to India such as edible oils are facing shortages due to the conflict in Europe and export bans by key producers. The jump in fertiliser prices and other input costs has a direct impact on food prices in India,” Mr Das said.

India’s main stock index, the Sensex,…