FirstFT: Lagarde warns ECB is braced for a split over inflation


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European Central Bank unity on its new inflation target could dissolve into division as early as next week when policymakers meet to discuss changing its guidance on raising interest rates, its president Christine Lagarde has warned.

The bank’s rate-setters are due to meet next Thursday for their first discussion since they last week launched an unanimously agreed new strategy, which changes the way the bank sets monetary policy for the first time since 2003.

Lagarde heralded the consensus agreement, which included a new 2 per cent inflation target and an increased tolerance for temporary moves above that level.

But, speaking on Sunday, she told the Financial Times:

“I’m not under the illusion that every six weeks [at monetary policy meetings] we will have unanimous consent and universal acceptance because there will be some variations, some slightly different positioning. And that is fine.”

Five more stories in the news

1. Elon Musk defends Tesla’s SolarCity takeover A combative Elon Musk ripped into a lawyer for the shareholders who are suing over the deal, in the first day of a trial that could saddle him with a huge compensation bill if he loses.

2. Biden voices support for Cuban protesters US president Joe Biden called on Cuba’s communist government to respond to protesters who staged the island’s biggest demonstrations in decades, saying they had issued a “clarion call for freedom”.

3. Racist abuse of England football players sparks political row Downing Street on Monday strongly rejected Labour claims that Boris Johnson had given cover to racists who targeted online abuse at members of the England team following their Euro 2020 final defeat against Italy.

  • More Euro 2020 coverage: While England fell short, they can point to progress under manager Gareth Southgate. Italians celebrated their win that for many fans has come to symbolise the end of the country’s “worst period”.

England’s Marcus Rashford reacts after missing a penalty kick at the Euro 2020 final © AP

4. Flipkart raises $3.6bn for near $40bn valuation Indian ecommerce company Flipkart has raised $3.6bn in funding for a valuation of $37.6bn, with main shareholder Walmart leading the round alongside SoftBank and Singapore’s sovereign wealth fund GIC.

5. Unrest spreads in South Africa after Zuma is jailed South Africa has deployed troops to help the embattled police force as unrest and violence spread after last week’s jailing of Jacob Zuma, the former president, for contempt of court.

  • Opinion: Zuma’s imprisonment underlines that the survival of democracy depends on an independent judiciary, writes Gideon Rachman.

Coronavirus digest

  • Israel will become the first country in the world to officially offer a so-called “booster” shot of the BioNTech/Pfizer Covid-19 vaccine.

  • Johnson & Johnson has been in discussions with US regulators about a rare neurological side effect of its Covid-19 vaccine, the company said on Monday.

  • Boris Johnson urged people to exercise “extreme caution” when he lifts Covid-19 legal restrictions July 19, shifting responsibility to companies and individuals.

  • New Zealand will begin operating emergency repatriation flights for citizens in Sydney as a Covid-19 outbreak in Australia’s most populous city worsens.

  • TSMC and Foxconn agreed to buy 10m doses of BioNTech’s Covid-19 vaccine to donate to Taiwan.

Follow the latest with our coronavirus live blog and sign up for our Coronavirus Business Update newsletter for more Covid-19 news.

The day ahead

China trade figures Beijing will release June trade data today. Last month, China’s exports and imports rose at a slower than expected pace, raising questions over global demand for its goods over the coming months.

US banks enter earnings season US banks will face tough questions about the prospects for their lending operations this week when they report second-quarter earnings flattered by smaller-than-expected credit losses during the pandemic. JPMorgan and Goldman kick off earnings season on Tuesday.

What else we’re reading

China misses out on record year for Indian tech fundraising Chinese investors have in effect been cut out of India’s tech sector, leaving the field clear for US and European venture capitalists. Indian start-ups raised a record $7.2bn across 336 funding rounds in the quarter ended June, according to data provider Tracxn.

Chinese investments in India tech

The next generation of Palestinian activists The social media and real-life activism exemplified by Mohammed and Muna al-Kurd chimes with an emerging Palestinian movement, which is increasingly uniting young activists from the occupied territories with Arabs who live inside Israel’s 1948 borders and hold Israeli citizenship.

Private equity’s raid on corporate Britain A proposed buyout of supermarket chain Wm Morrison is the latest example of a dramatic shift that has accelerated during the pandemic as a portion of the economy, long dominated by public companies, shifts into private hands. For more M&A coverage, subscribe to our Due Diligence newsletter.

Lower bond yields are no longer good news for stocks Are investors having too much of a good thing — that is, interest rates that are artificially low for too long? Last week’s broad-based equity sell-off is leading investors to ask that question, says Mohamed El-Erian.

  • Go deeper: It was a humbling week for bond bears, writes markets editor Katie Martin, after an abrupt rethink by investors in what she dubs “The Great Bond Wobble of 2021”.

The face of a changing Tibet “My wife and I might be among the last of the nomads here,” said one man in Ladakh along the border of China and India. The loss of the Tibetan culture is a growing fear as its people face the simultaneous challenges of political suppression, technological advances and climate change. (NYT)


Bicycles are an indispensable part of Japanese infrastructure. Even in Tokyo, where the temperature rises above 30C for weeks with inhumanely high humidity (and a capillary-like network of air-conditioned public transportation to counter it), cyclists are still everywhere. FT’s Hidenaka Kato offers four suggested routes.

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