Closing summary
Global stocks have sold off after hotter-than-expected US inflation figures raised expectations of aggressive rate hikes from the Federal Reserve. Core inflation, which strips out food and energy as they tend to be volatile, rose to 6.6%, the highest since 1982, while the headline rate rose to 8.2%.
European shares had turned positive earlier amid rumours that the UK government is preparing to backtrack on some of the unfunded tax cuts in the mini-budget. The pound has pared gains but is still up 0.9% against the dollar at $1.1207.
One government source told the Guardian that No 10 officials were reviewing the mini-budget in order to shore up Truss’s premiership after Kwasi Kwarteng’s disastrous economic growth plan last month. The chancellor is in Washington for the International Monetary Fund’s autumn meeting, and reportedly said that he would not pre-empt his budget statement on 31 October.
You can read more on our politics live blog here.
UK and other government bonds have rallied today on the reports (following yesterday’s heavy selloff), also boosted by the Bank of England ramping up bond-buying ahead of the end of its emergency programme tomorrow.
Our other main stories today:
Thank you for reading. We’ll be back tomorrow. Bye! – JK
Reports of U-turn on mini-budget welcomed by IMF
Reports of a U-turn on Kwarteng’s mini budget were welcome by the International Monetary Fund, which has been publicly critical of the unfunded tax cuts announced last month, reports our economics editor Larry Elliott.
Kristalina Georgieva, the IMF’s managing director, said: “It is correct to be led by the evidence so if the evidence is that there has to be a recalibration it is right for governments to do so.”
Georgieva said she had had a “constructive meeting” with Kwarteng and Andrew Bailey, the Bank of England governor, who are both in Washington for the annual meeting of the IMF this week.
“We discussed the importance of policy coherence and communicating clearly so in these jittery times there are no reasons for even more jitters”, Georgieva said.
