Welcome to the Business Post’s Live News section. We’re here all day to keep you up to date on the latest developments in business, tech and current affairs.
16.50 - Microsoft and Nvidia to face US AI Antitrust Probes
Two US antitrust agencies have agreed to divide responsibility over the artificial intelligence industry, giving the Federal Trade Commission the go-ahead to open a probe into Microsoft’s relationship with OpenAI, according to people familiar with the matter.
As reported by Bloomberg, the US Justice Department will probe whether Nvidia violated antitrust law and retain oversight over Alphabet’s Google, according to the people, who asked not to be named discussing inter-agency negotiations.
The agencies reached the deal in the last few days after more than six months of negotiations, the people said. The agreement gives each agency authority to open an antitrust probe into the company’s conduct as well as recent deals related to it.
As part of that, the FTC has opened a probe into whether Microsoft failed to properly notify the antitrust agencies about its deal with Inflection AI, according to the people. In March, the Redmond, Washington-based software giant agreed to pay the start-up $650 million (€597 million) to license its AI software and hired much of Inflection’s staff.
16.25 - IMF welcomes South Africa’s progress in fighting inflation
The International Monetary Fund welcomed the South African central bank’s efforts to reign in consumer price growth, a spokeswoman for the Washington-based lender said Thursday.
As reported by Bloomberg, headline inflation returned to within the South African Reserve Bank’s 3 per cent to 6 per cent target range in 2023 thanks to “decisive” monetary policy tightening, Julie Kozak of the IMF said. “We have seen some very welcome progress”.
The central bank held its benchmark interest rate steady last week at a 15-year high of 8.25 per cent, warning that while price pressures have moderated in recent months, they are still too high.
The decision had been widely anticipated, with economists expecting the central bank to keep a low profile when it delivered its verdict one day after South Africans voted on May 29.
16.00 - Michael McGrath reacts to ECB rate cut
Minister for finance Michael McGrath has reacted positively to the European Central Bank’s (ECB) rate cut today, signalling that it would be welcomed by many businesses and households.
“Looking ahead, the continued easing of inflation and future interest rate cuts should help to support the purchasing power of households, underpinning growth in the domestic economy,” he said.
McGrath said that though today was a good day on the whole, he is aware that many families still face cost pressures.
“It is important going forward that the correct balance is struck between providing supports to those still affected by the recent rise in prices while ensuring that fiscal policy does not act to put inflation on an upward path once more,” he added.
15.30 - Analysis on Intel’s $11b Apollo deal
Our markets correspondent Kathleen Gallagher has taken a look at what the recently announced $11 billion (€10.1 billion) deal between Intel and Apollo means for the state of funding for blue-chip stocks.
It is far from your typical infrastructural investment, as Gallagher outlines, and represents the next stage of its ‘Smart Capital’ plan, which aims to reinvigorate the US giant’s manufacturing capabilities.
Unlike other infrastructure deals, Intel has tied itself to the purchase of the chips created by the plant being funded, thereby ensuring a return for Apollo in any case.
15.04 Markets reaction
Lagarde has finished up with her address to reporters. Here’s how markets reacted to the decision. Thanks for following along as we covered the rate cut announcement.
We’ll have more coverage throughout the evening and into tomorrow, as well as the usual mix of news here for the next few hours.
15.03 - Bank of Ireland reveals when tracker customers will receive updated rates
Bank of Ireland said that all of their tracker mortgage customers will have their rates cut by 25 basis points, with most of them receiving the lower rates from June 18.
Other non tracker mortgage rates will be kept “under ongoing review”, it said.
The bank said it would contact tracker customers shortly with their updated rate, repayment amount and their effective date.
14.57 Lagarde remains coy
The ECB president said she wouldn’t be drawn on whether cuts are more likely at quarterly meetings, saying its approach would remain “data dependent”.
One telling comment with regard to future cuts came when she said mentioned “much later in the summer” - a nod to the fact that a July cut now looks increasingly unlikely.
14.53 Bund yields rise on back of decision
Interest rate-sensitive two-year German Bund yields rose to 3.02 per cent shortly after the European Central Bank cut interest rates for the first time in almost five years.
The increase was 0.05 percentage points on the day, and a rise of 0.02 percentage points compared with before the announcement.
14.50 Macron unhappy?
Emmanuel Macron, the French President, has called again for a “bolder monetary policy” mandate for the European Central Bank that includes growth and job creation as targets.
Lagarde, in response, said there is a clear mandate enshrined in the treaty. The ECB, unlike her fellow countryman, doesn’t see the need or capacity to change that, she adds. Instead, she says price stability helps sustainable investment which is a way of contributing to the fight against climate change.
14.40 Search on for the dissenter
The decision arrived at by the governing council was unanimous, almost. One member of the council took a different view and while it’s unclear who that was, the internet and market observers are busy speculating.
14.33 Garbled explanation
Jamie Rush, the chief European economist at Bloomberg Economics, wasn’t terribly impressed with some of Lagarde’s explanations, describing her comments on the data the ECB would watch to determine future rate decisions as “garbled”.
Rush wrote: “In a somewhat garbled description of what data the ECB would need to consider the next cut, Lagarde made a nod to ‘much later in the summer’ suggesting to us at least that a July move is not really in question.
“She was also unable to declare that the ECB is in a dialing back phase - casting doubt on how swiftly cuts will come. It will depend on the data, and our own view is that inflation will undershoot the ECB’s target, creating space for three cuts this year.”
14.31 Full overview of rate cut decision
The ECB has published its full statement outlining its rationale. If you really want to get into the weeds of the decision, it’s here for your perusal.
Here’s part of the conclusion, which sums it up neatly.
“We are determined to ensure that inflation returns to our two per cent medium-term target in a timely manner. We will keep policy rates sufficiently restrictive for as long as necessary to achieve this aim. We will continue to follow a data-dependent and meeting-by-meeting approach to determining the appropriate level and duration of restriction.”
14.28 ECB view on wage growth outlined
The ECB assumes that wages will remain elevated, Lagarde says. But its own wage tracker shows that there will be a decline based on agreements that are coming in.
“It’s not an easy matter,” she says.
Overall, however, she says wages are “on a declining path”.
14.23 More observations from Danske Bank
Our friend Piet Haines Christiansen is back with another astute observation on Lagarde’s reluctance to highlight which particular phase of the fight against inflation we’re now in.
14.20 New life for EU economy
The Financial Times has a good read on how the rate cut could spur the eurozone economy.
As Martin Arnold writes, the rate change, while modest, will have wide-ranging impacts across several sectors.
“By starting to lower rates again, the bank is set to breathe fresh life into housing markets, business investment and consumer spending. The ECB last year raised its benchmark deposit rate to a record 4 per cent, putting a chokehold on economic activity to tackle the biggest price surge for a generation.”
That in a nutshell is the power of central banks. Today is a big day, even if the cut itself is small and the path foward remains unclear.
14.17 Future outlook remains unclear
Lagarde is pretty upfront about where things will go from here in saying that the speed at which the ECB will now travel on its rate-cutting journey is very uncertain.
She hints that other central banks may be more willing to give further clarity but adds that there is always bumps on the road, in an apparent warning to her monetary policy colleagues.
14.11 Inflation easing
Lagarde adds more context for the decision, saying that inflation rates had halved before the governing council moved to cut rates.
She also stresses the “reliability” and “robustness” of the ECB’s projections.
14.05 Mismatch between action and projections?
Reporters are now putting questions to Lagarde. The first one seems pertinent: why cut rates while also raising your inflation forecast?
The Frenchwoman responds by saying that the governing council’s decision was based on its confidence in the “path ahead” increasing over recent months.
14.02 Committing to not pre-committing
The overriding message from the governing council’s announcement and Lagarde’s opening statement?
The ECB is not “pre-committing” to a future path. It’s how she finishes up her opening remarks.
14.01 Economic projections
Risks to economic growth are balanced in the near term, but tilted to the downside in the medium term, Lagarde said.
14.00 Lagarde press conference
Christine Lagarde is holding a press conference following the decision. Some of her language would suggest that further cuts this year may be kept to a minimum.
Services inflation rose “markedly,” she said. That doesn’t sound like an indication that a slew of further reductions are coming down the tracks. Wages were still raising at an elevated pace too, she added.
13.55 Confidence boost for businesses
Michael Lauhoff, head of corporate banking at Bank of Ireland, told the Business Post this morning that he did not expect the rate cut decision to spur SMEs to start borrowing en masse.
He did, however, say it would act as a much-needed boost to confidence.
“We’ll be looking to see how we can inspire that confidence to invest, and take that opportunity, as the interest rate environment seems to be modifying, for people to take on that investment in their business.
“The most important part, if there is a rate decrease, is around that confidence piece,” Lauhoff told the Business Post.
You can read his comments and those of other sectoral experts in Donal MacNamee’s report here.
13.59 Banking lobby welcomes cut but offers no rate guidance
The Banking and Payments Federation Ireland (BPFI) said the rate cut represented an immediate boost for thousands of borrowers - but did also note that banks hadn’t fully passed on the increases of recent years either.
Brian Hayes, the chief executive at the BPFI, said lenders were legally prohibited from signalling any future price change, “either publicly or privately”.
Read his full comments here.
13.51 - Savers set to ‘lose out’ - Credit Union
In a more local view, Paul Roche, chief executive of the Teachers Union of Ireland Credit Union, said that the rate cut would be good for mortgage holders, but savers were set to “lose out”.
“Some bank deposit rates will likely start to fall now - indeed, there are already signs that this is happening,” he said.
“Today’s announcement should, if nothing else, serve as an important reminder to us all that we must be discerning when it comes to where we deposit our hard-earned money,” he added.
“Before ECB rates started to rise in July 2022, European interest rates had been at record lows since March 2009 so most savers had been getting a dismal return on their savings for more than a decade,” he said.
The newly raised rates that savers have become accustomed to is likely to be “short-lived”.
13.45 - Economist labels ECB move ‘hawkish’
Mark Wall, Chief European Economist at Deutsche Bank, said the scale of the rate cut - 25 basis points - was expected, but the ECB gave less guidance than was expected on its next steps.
“In that sense, the immediate tone is a ‘hawkish cut’,” he said. “This is not a central bank in a rush to ease policy.”
13.42 - Splitting hairs or key clue?
Piet Haines Christiansen, a director at Danske Bank, on X highlighted a phrase he thinks might be particularly meaningful.
“ECB 25bp cut as expected and maybe splitting hairs here, but take note of the word “keep” in this sentence: ‘It will keep policy rates sufficiently restrictive for as long as necessary to achieve this aim’. No pre-commitment to a particular rate path. July cut should be out of q,“ he wrote on the social media platform.
Kathleen Gallagher, our markets correspondent, wrote about how expectations of future rate cuts have been pared back of late, this morning.
13.40 - Simon Harris says rate cut ‘welcome relief’ for mortgage holders
Taoiseach Simon Harris has reacted positively to news of the ECB’s rate cut, saying that it was “welcome relief” to those on tracker mortgages especially.
“Many households have experienced increases in their monthly mortgage repayments during a cost-of-living crisis,” he added.
“As we move into an era of interest rate reductions, we need mortgage holders to feel the benefit. I have written to the banks and will be meeting them shortly for a discussion on this.”
13.30 - Brokers Ireland welcomes rate cut
Brokers Ireland said that today's rate cut will come as a relief to “many hard pressed mortgage holders” that have “endured” ten rate hikes since mid-2022.
Rachel McGovern, the body’s director of financial services, said it would have an “immediate” effect on tracker mortgages, while variable and fixed rate customers would have to wait for the decisions from their lenders.
“With MoCo now in the market and Nua mortgages launch imminent, competition on mortgage rates may be about to heat up,” she said.
Further reductions would be “minimal and slow,” however, she said, with “little prospect” of returning to the historic low rates of pre-July 2022.
13.20 ECB updates inflation outlook
The full ECB statement can be read in full here. It makes for interesting reading, particularly around its inflation outlook.
The governing council noted that “inflation has fallen by more than 2.5 percentage points and the inflation outlook has improved markedly”.
Its new projections are as follows:
“Staff now see headline inflation averaging 2.5 per cent in 2024, 2.2 per cent in 2025 and 1.9 per cent in 2026. For inflation excluding energy and food, staff project an average of 2.8 per cent in 2024, 2.2 per cent in 2025 and 2.0 per cent in 2026. Economic growth is expected to pick up to 0.9 per cent in 2024, 1.4 per cent in 2025 and 1.6 per cent in 2026.”
13.18 Policymakers reiterate commitment to “data-dependent” approach
The ECB governing council is remaining coy about what its next steps will be, by the looks of their statement:
“The governing council is determined to ensure that inflation returns to its 2 per cent medium-term target in a timely manner. It will keep policy rates sufficiently restrictive for as long as necessary to achieve this aim. The governing council will continue to follow a data-dependent and meeting-by-meeting approach to determining the appropriate level and duration of restriction.
“In particular, its interest rate decisions will be based on its assessment of the inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation and the strength of monetary policy transmission. The Governing Council is not pre-committing to a particular rate path.”
13.16 ECB cuts rates
The ECB has cut its three key interest rates by 25 basis points, as almost unanimously expected and widely telegraphed by officials.
Details here:
ECB deposit facility rate cut by 25bps to 3.75 per cent
ECB main refinancing rate cut by 25bps to 4.25 per cent
You can read the full story on this well-flagged, but nonetheless historic move, here
13.15 Businesses set to benefit
It’s expected that the rate cut will be modest but for businesses, it could be significant as access to finance improves.
JP Morgan’s Adrian Mullet told the Business Post that it was a “moment of opportunity”,
And while others said the rate cut in and of itself wouldn’t dramatically shift the finance landscape, it would mark an important first step in stimulating demand among SMEs.
Donal MacNamee has the full story.
13.10 ECB rate cut set to be announced
The European Central Bank is poised to start lowering interest rates from record highs, confident that inflation is sufficiently contained to ease the burden on the economy.
After being held at a peak of 4 per cent for nine months, analysts polled by Bloomberg almost unanimously predict that the deposit rate will be reduced by a quarter-point to 3.75 per cent on Thursday — a step ECB officials have widely telegraphed in recent weeks.
Despite a bumpier retreat in price growth toward the 2 per cent goal, Christine Lagarde, the ECB president, declared in May that inflation in the 20-nation euro zone is “under control” following its historic spike. That’s put the ECB on course to loosen monetary policy before either the Federal Reserve or the Bank of England, where the problem is proving more stubborn.
12.18 Labour steams 20% ahead of Conservatives in polls
Keir Starmer’s Labour Party maintains a 21.7-point lead over Prime Minister Rishi Sunak’s governing Conservatives with exactly four weeks to go until UK election day.
Labour is on 45 per cent and the Conservatives are on a fraction over 23 per cent on Thursday, according to Bloomberg’s polling composite — a rolling 14-day average using data from 11 UK polling companies. Reform UK, the insurgent right-wing party that shook up the campaign this week when Brexit architect Nigel Farage said he would take over its leadership and stand in the election, is on 11.4 per cent.
11.41 One in five firms unprepared to embed green procurement practices
Three out of ten organisations have not yet implemented green procurement practices (GPP) and 20 per cent do not feel prepared to do so, a new survey by business law firm Mason Hayes & Curran reveals.
GPP refers to when an organisation seeks to source goods, services or works with a reduced environmental impact throughout their life cycle.
Limited supplier options emerged as the primary challenge in embedding GPP, cited by four in ten respondents (40 per cent). This was closely followed by budget constraints (31 per cent) and resistance to change (29 per cent).
11.29 Economy grew 0.9 per cent in Q1
The Irish economy returned to growth in the first quarter of the year, new figures from the Central Statistics Office (CSO) show.
Gross Domestic Product (GDP) expanded 0.9 per cent in Q1 after four consecutive quarters of decline.
This is slightly down of preliminary estimates of 1.1 per cent.
Modified Domestic Demand (MDD),a broad measure of underlying domestic activity that covers personal, government, and investment spending, went up by 1.4 per cent, while total exports expanded by 7.3 per cent
11.20 Supervalu acquires Clean Cut Meals
SuperValu has acquired Clean Cut Meals, a ready-meal production company based in Galway, expanding its convenience meal offering.
Established in 2015, Clean Cut Meals specialises in a range of products, which cater for consumers who seek out “healthier choices”, according to a statement from SuperValu.
The business offers a range of meal plans including breakfast, lunch, dinner and snack options. Its monthly menu changes to keep the range “as fresh as possible”, and helps its ability to adapt to changing customer tastes and demands.
10.30 Ireland’s MEPs’ records
Ahead of European elections tomorrow, our Brussels correspondent Sarah Collins has done a deep dive into exactly what Ireland’s MEPs have been up to for the last five years. From voting records, to attendance rates, to earning from side gigs, the activities of Ireland’s MEPs inside and outside the parliament are revealed in great detail.
According to figures gathered by Renew group -- the European Parliament political grouping that is home to Fianna Fáil’s two MEPs -- Sinn Féin, Independent and Green MEPs have abstained at a far greater rate than other deputies in European Parliament votes over the last five years. Sinn Féin’s Chris MacManus abstained on 1,357 votes, almost 10 times the rate of Fianna Fáil’s Andrews, more than independents Mick Wallace and Clare Daly and twice the rate of Ireland’s two Green MEPs.
8.40 ECB rate cut expected later today
A highly anticipated rate cut from the ECB is expected at 1:15pm Irish time today. The announcement is expected to see the main refinancing rate drop from 4.5 per cent to 4.25 per cent on Friday, with the deposit rate falling from 4 per cent to 3.75 per cent.
There will be a lot of focus on the justification for the ECB’s decision to move first, especially since the recent data has not been supportive. No one sees policymakers reneging on June’s cut, but they do expect the bank to strike a hawkish tone.
Christine Lagarde, president of ECB, will also want as large a majority as possible to sign off on the rate cut and ideally for it to be a unanimous decision. If there are divisions then the move will be seen as more risky.
8.15am Nvidia leapfrogs Apple with $3 trillion valuation
Nvidia, the world’s most valuable chipmaker, has hit a $3 trillion valuation, surging past Apple. The AI chipmaker has now become the first computer-chip company ever to hit $3 trillion in market capitalisation. The shares of the California-based firm have rallied roughly 147 per cent this year, adding about $1.8 trillion as the insatiable demand for its chips used to power artificial intelligence tasks skyrockets.On Wednesday, shares rose 5.2 per cent to close at a record $1,224.40, pushing the market value to more than $3 trillion and overtaking Apple in the process.
The last time Nvidia was worth more than Apple was in 2002, five years before the first iPhone was released. At the time, both companies were worth less than $10 billion each.
7.15am Meta restores Labour Party ad account
The Labour Party’s ad accounts with Facebook and Instagram were unexpectedly suspended yesterday evening ahead of European and local elections this week, the party has revealed. While the accounts were restored last night by Meta, the owner of Facebook and Instagram, a Labour spokesperson claimed they had been given no reason for why it was disabled “for at least two hours during a critical period when people are making up their mind about how to vote”. Ivana Bacik, Labour Party leader, said that while the situation had now been resolved, it was “deeply worrying that Meta can disable ad accounts for political parties without explanation, so close to an election”. Meta told the Business Post it is investigating what happened.
7am - Sharon Donnery to leave Central Bank
Sharon Donnery, Deputy Governor Financial Regulation at the Irish Central Bank, is to leave her role to take up a new position with the European Central Bank (ECB). Donnery has been appointed to the Supervisory Board of ECB Banking Supervision, which is responsible for planning and carrying out banking supervision for the ECB. She will remain at the Central Bank of Ireland until late 2024, continuing her current responsibilities with a particular focus on finalising and delivering the Central Bank’s transformation of Regulation and Supervision. Donnery said she was delighted to be joining an institution of such calibre and standing. She joined the Central Bank of Ireland as an economist in 1996 and has worked across the bank in a number of senior roles.