Alex Bummer: Bailey should observe the ECB with rate of interest lower

Are you watching, Andrew Bailey? The European Central Bank (ECB) is not known for its boldness. But after five years of holding its key interest rate at 4pc, it decided that credit conditions are too tight and delivered a quarter of a percentage point cut in rates to 3.75pc.

It put to one side concerns that consumer prices remain sticky, wages keep rising and service sector costs are elevated.

Bank of England Governor Bailey and the monetary policy committee will make its next rate decision on 20

Just to underline the bravery of bank president Christine Lagarde’s decision, it came on the day that Dutch voters were the first to the polls in the European parliament elections across 27 countries.

That demonstrates the Frankfurt-based bank’s independence of politics.

The ECB joins a cadre of Western central banks, including Canada, Sweden and Switzerland which regard the battle against the cost of living pressures – caused by Covid supply chain bumps and Russia’s war on Ukraine – as over.

Indeed, signs of softness in the global economy are emerging, driving Brent crude oil prices down to $77 a barrel.

All of this should give Bank of England Governor Bailey and its monetary policy committee (MPC) licence rapidly to lower rates from the present 5.25pc, to 5pc, on June 20. It needs to get on with the job if it is to follow IMF advice and bring rates down to 3.5pc this year.

Headline inflation, down from a peak of 11pc to 2.3pc, is on track. Both the housing market and retail sales are being stifled by unnecessarily harsh rates as the MPC overcorrects from its past mistakes.

A cut in the midst of a heated election campaign would underscore Bank independence. It would be detrimental to the country if a necessary rate cut was delayed for fear it would be seen as giving advantage to the governing Tories.

A cut would ensure that the recovery seen in the first quarter of the year is not obliterated by monetary machismo.

Chip bait

Great excitement at the surge in the valuation of chipmaker Nvidia to $3trillion (£2.3trillion) making it more valuable than stylish, omnipresent Apple.

The surprising aspect of Jensen Huang’s artificial intelligence (AI) pioneer is that it is a component supplier rather than the provider of a product in the manner of Apple or electric vehicle star Tesla.

Nvidia is not a name that rolls off the tongue at the Pig & Whistle or while scrolling through Tinder.

When we think of motor marques or Dyson hairdryers, the names of component makers do not register. AI has become the technology of the moment and is seen as transformative in every aspect of life, from making the NHS work better to speeding up trades on financial markets.

Other potential champions, such as Cambridge-based Arm Holdings, may have the intellectual capacity but have not been effective challengers, leaving Nvidia dominant. It effectively has become the 21st century equivalent of Standard Oil.

A world obsessed with mobile devices and laptops is never going to be satisfied with second-best tech. All we can hope for, when we acquire a new cell phone, is a more user-friendly design or a better camera.

As the first AI chips are embedded in our phones and laptops there will be a tremendous leap forward.

Imagine how much faster Tinder will be updated, or one of Labour’s 40,000 extra hospital appointments could be achieved.

That’s why Nvidia’s hype makes so much sense.

Rain makers

An honorary knighthood for the feted hero of American banking Jamie Dimon is almost certainly deserved.

There may be doubts in some quarters about his less-than-helpful comments about the impact on Brexit and his cultivation by French president Emmanuel Macron (a former Rothschild banker).

Still, it can’t do the prospects of Rishi Sunak or Chancellor Jeremy Hunt postelection any harm.

There is a long tradition of former chancellors being catapulted onto bank boards. The late great tax cutter Nigel Lawson went to Barclays.

Labour’s Alistair Darling joined Morgan Stanley. And Sajid Javid has returned to JP Morgan.

Let the doors revolve.