Thursday, August 4, 2016

Bank of England cuts interest rate to 0.25%; Brazil's shrinking economy has Olympic-size troubles; Uber plans global roadmap for drivers

1 Bank of England cuts interest rate to 0.25% (Katie Allen & Larry Elliott in The Guardian) The Bank of England has cut interest rates for the first time in more than seven years and warned high-street lenders to pass on cheaper borrowing costs to customers. It is a bigger-than-expected package of measures designed to prevent a post-Brexit recession.

The Bank cut official interest rates to a new record low of 0.25% from 0.5% and signalled they would be reduced further in coming months as the economic fallout from the vote to leave the EU becomes clearer. The move will bring relief to borrowers but has already angered savers who have been getting low returns for years thanks to rock-bottom interest rates.

Desperate to ensure the cut is felt by households and businesses in the real economy, the Bank’s governor, Mark Carney, took a tough line with commercial banks, telling them they had no excuse not to pass the lower official borrowing costs onto customers.

As part of a four-point package, Carney unveiled additional funds for banks to cushion the blow to their profitability from lower interest rates. He personally called bank bosses after Thursday’s announcement to make it clear the Bank wanted to see the full benefits of its anti-recession strategy felt by households and businesses.

Carney argued that a range of measures was needed now to limit job losses and support growth in the UK economy as it went through “regime change” following the decision to leave the EU. The Bank’s forecasts were for a slower earnings growth and for 250,000 job losses, even with these stimulus measures.


2 Brazil’s shrinking economy has Olympic-size troubles (San Francisco Chronicle) The 2016 Olympic Games come at a dire moment for Brazil, which is enduring myriad calamities: A deep recession. A political crisis. Widespread street protests. Reports of filthy waterways. And a health emergency caused by the Zika virus.

Brazil's economy shrank 3.8 percent last year and will likely contract an additional 3.3 percent this year, according to the International Monetary Fund. The economy was rocked by a plunge in prices for iron ore and other commodities it exports, partly a result of slowing demand as China's powerhouse economy decelerated.

In the booming mid-2000s, Brazilians celebrated their collective arrival in the middle class by borrowing heavily to buy cars, refrigerators and iPhones. Now, like Americans after the devastating 2008 financial crisis, they face diminished livelihoods.

A political crisis has compounded the economic troubles. President Dilma Rousseff was suspended in May for allegedly violating budget laws. She is awaiting a trial this month in Brazil's Senate that will determine whether she'll be permanently ousted.

Business investment has been paralyzed by an investigation into corruption at the state-owned energy giant Petrobras. Once worth more in the stock market than either Microsoft or Wal-Mart, Petrobras has been reduced to selling assets — from oil fields to corporate subsidiaries — to raise cash to offset lower oil prices.

The Olympics might be making things even worse. To prepare for the Games, the state of Rio spent heavily. When it ran into financial trouble, the federal government stepped in to help share the costs, thereby deepening the country's budget woes. The Brazilian real has plunged 47 percent against the US dollar since Rio was awarded the '16 Games in October 2009.


3 Uber plans global roadmap for drivers (BBC) Uber is embarking on a global mapping project that it hopes will offer its drivers more useful data on pick-up locations and traffic patterns. Currently the taxi-booking app relies on Google's mapping technology to display local maps and mark pick-up locations.

But a senior Uber executive says that more relevant information can be drawn if it produces its own road maps. The firm is said to be investing $500m in the mapping project. "Existing maps are a good starting point, but some information isn't that relevant to Uber, like ocean topography," said Brian McClendon, who up until 2014 was vice-president of Google Maps.

Last year, Uber began scanning roads across the US using mapping cars, which can track the geographical position of each street and motorway. The firm said that these vehicles will be operational in Mexico "this summer", as part of a wider plan to use these vehicles in big cities around the world.


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