FirstFT: Truss wants to change BoE’s mandate on inflation

Good morning. Foreign secretary Liz Truss, frontrunner in the race to become the next British prime minister, said she would look to change the Bank of England’s mandate to ensure it controlled inflation.

Speaking at a hustings of Conservative party members in Cardiff yesterday, Truss argued that inflation had been caused by “huge” supply side shocks after the pandemic and the Ukraine war, adding that she wanted to review the mandate of the central bank, which has a target of 2 per cent inflation.

BoE policymakers will meet today to discuss stepping up the pace of monetary tightening to combat surging prices. Governor Andrew Bailey has said a 0.5 percentage point increase will be “among the choices on the table”. In June, consumer price inflation in the UK stood at a 40-year high of 9.4 per cent.

“The best way of dealing with inflation is monetary policy . . . I want to change the Bank of England’s mandate to make sure in the future it matches some of the most effective central banks in the world at controlling inflation” — Liz Truss

Truss, who has pitched herself as the low-tax, high-growth candidate, has pledged to reduce the planned national insurance rise and introduce low-tax investment zones to reinvigorate the economy.

With ballots landing on the doormats of 150,000 party members, Truss and Sunak will take part in another televised debate on Sky News at 8pm BST tonight.

Thank you to everyone who took part in yesterday’s poll. Forty-four per cent of respondents said they thought Truss would win the leadership race, while 39 per cent said they thought Sunak would win. Here’s the rest of the day’s news — Jennifer

Five more stories in the news

1. SoftBank raises $22bn in moves to sell down Alibaba stake The Japanese technology investor led by billionaire Masayoshi Son has raised $22bn in cash from deals that would sharply reduce its stake in Alibaba as it responds to a market downturn that has ravaged its tech portfolio.

2. BP and UK supermarkets urged to cut petrol prices Motoring organisations yesterday called on the oil major and the big four supermarkets — Asda, Wm Morrison, Tesco and J Sainsbury — to provide support to Britons struggling with the cost of living crisis, accusing them of charging “what they can get away with”.

3. Gerhard Schröder says Russia wants negotiated end to Ukraine war Germany’s former chancellor the Kremlin is open to talks to end the war in Ukraine after visiting Vladimir Putin in Moscow last week. Schröder has been harshly criticised over his links to Putin, a close friend, but contends he has “condemned the war many times”.

4. Nancy Pelosi vows US support for Taiwan The US House Speaker pledged an “ironclad” commitment to the country during a historic visit yesterday that infuriated China and raised warnings that Beijing’s military response could amount to a blockade. For Pelosi, the trip was the latest salvo in a career of standing up to China over human rights issues.

5. Elon Musk subpoenas Goldman Sachs and JPMorgan in Twitter fight The Tesla chief is seeking information on how the two Wall Street banks advised Twitter on his proposed $44bn buyout of the social media company, which he is now seeking to abandon. Musk and Twitter are preparing to start trial in October.

The day ahead

Company earnings Alibaba, Bayer, ConocoPhillips, Eli Lilly, Kellogg, Next, Lyft, Paramount, Pirelli and Rolls-Royce are among those reporting — see our full list here. Investec and Tesla hold annual meetings.

Economic data The European Central Bank posts its monthly economic bulletin. US new weekly unemployment applications are forecast to have fallen, while the trade deficit is expected to have narrowed in June for the third month. (FT, WSJ)

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What else we’re reading

The women calling out Apple In interviews with the Financial Times, more than a dozen past and present employees accused Apple’s HR team of putting the Silicon Valley giant’s reputation ahead of workers’ welfare. Inspired by the #MeToo movement, more women are sharing allegations of apathy and retaliation in the face of misconduct claims.

The Taliban’s black gold Thanks to a global surge in commodity prices following the Ukraine war and Covid-related disruption, business is booming in Afghanistan’s coal mines. The fossil fuel offers a crucial revenue stream to the militant group after it seized power a year ago, which led to international sanctions that crippled the country’s economy.

Why are we still not punishing bosses for failure? Last week, the UK’s financial watchdog fined three former executives of collapsed construction company Carillion, in an unusual instance of directors being penalised. More companies are adopting malus and clawback provisions, but Cat Rutter Pooley argues that they are not yet credible.

Heathrow’s fraught post-Covid labour relations Staff at the UK’s largest airport — which is also the biggest workplace in Europe — are struggling to deal with the fallout of cancelled flights and manage big queues at terminals after Covid-19 redundancy rounds left employers struggling to rehire to meet resurgent demand for travel.

The genius of the uncool vacation After a rough start to the year, Imogen West-Knights decided she needed a holiday. Specifically, an all-inclusive package holiday. It wasn’t original, and it did not improve her mind or expand her horizons — but it was just what she needed.

Food & drink

Fizzy water has bewitched humans since ancient times, writes Alice Lascelles, who reviews the best H2O with bubbles for HTSI.