Closing summary
The rate of US inflation barely moved in November, the last piece of major economic news before the Federal Reserve weighs whether to cut interest rates for the third time this year at its meeting next week.
Prices rose 2.7% in November compared with a year before, according to consumer price index (CPI) data released by the Bureau of Labor Statistics (BLS) on Wednesday measuring the prices of select goods and services. The core inflation rate, which removes the volatile food and energy industries from the data, held steady last month, at 3.3%.
The annual rate of inflation still remains above the Fed’s targeted goal of 2%, but many economists and investors are betting that the Fed will cut rates on 18 December. Expectations place a potential cut at a quarter-point, which would bring rates down to 4.25% from 4.5%.
Inflation peaked at 9.1% in June 2022, a 40-year high, and has gradually come down over the last two years. The lowest inflation has been since then was 2.4%, in September, though it ticked up to 2.6% in October.
The Supreme Court has granted permission for two car lenders to appeal a landmark ruling on motor finance commission payments that has left firms fearing a potential £30bn compensation bill.
The decision gives Close Brothers and MotoNovo owner FirstRand a chance to overturn a decision by the court of appeal, which in October said that paying “secret” commission car dealers - without disclosing the sum and terms of that commission to borrowers - was unlawful.
The court of appeal decision went beyond existing City regulation and an ongoing Financial Conduct Authority investigation into harms caused by now-banned discretionary commission arrangements (DCAs). It also opened the door to a fresh flood of claims that ratings agency Moody’s says could now cost lenders up to £30bn.
News that the supreme court had accepted the case bolstered motor lenders’ shares. Close Brothers jumped as much as 8% while Lloyds Banking Group rose by 4%, and Barclays climbed by 1.6%.
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Thank you for reading. Take care! – JK
Updated
The Financial Conduct Authority has welcomed the “swiftness” of the Supreme Court’s decision to hear an appeal against the Court of Appeal’s judgment in three recent motor finance cases involving Close Brothers and FirstRand Bank.
We previously wrote to the Supreme Court asking it to decide quickly whether it will give permission to appeal and, if it does, to determine the substantive appeal as soon as possible. This is because of the potential impact of any judgment on the motor finance market and the many consumers who rely on it. We are considering whether to formally intervene in the case to share our expertise to assist the Court on the substantive appeal.
We have proposed extending the time firms have to respond to motor finance complaints where a non-discretionary commission arrangement was involved. We will take the Court’s decision to hear the appeal into account as we decide on the outcome of our consultation. We thank everyone that responded to the consultation and will publish our policy statement by 19 December 2024.
