Carlsberg, its joint-venture partner in the growing Russian market, was tipped as a bidder yesterday, but so was private equity. The stock hit its highest level since November 2002, up 21p to 488.5p in three times the usual volume.Goldman Sachs threw its considerable trading weight behind a new investigation of the engineering sector from its respected analyst, Charles Burrows, yesterday, sending shares in a raft of manufacturers soaring. Traders chasing the next likely mergers and acquisitions candidates, after the approval of Allied Domecq's takeover by Pernod Ricard, alighted on S&N, arguing its size, as a relatively small player in the global brewing industry, would make it easy enough for a bigger player to down. Shares in Scottish & Newcastle, the historic brewer behind John Smith's bitter and Newcastle Brown Ale, shot up in heavy volume yesterday, triggering speculation that the company has attracted a bid approach. But then when rates do start to fall there may be a case for giving a sharp signal: cutting by half a point, not a quarter. Not sure about that, because it may be that to signal a change in direction will be enough.
But it is often better to wait and move decisively than move early and wonder whether you have done the right thing.. It will not be above 3 per cent, and may be quite close to 2 per cent. But we don't know how much damage this does to revenues and spending. If public finances are heading into a real mess, lower rates will be needed to offset the rise in taxation that is needed to correct that mess. But we won't have much of a feel for that until the autumn.That all suggests another couple of months wait: maybe September, more likely October. Growth this year is clearly going to be well below the number the Chancellor first though of. One is the current weakness of sterling - not a dramatic decline, but enough to beware particularly when US interest rates are heading up.
You don't want sterling to weaken too much against the dollar at a time when nominal oil prices, denominated in dollars, are at an all-time high. There is an argument for waiting until it is clear that US rates will not rise any further before starting to pull ours down.The other is the fiscal position. So what should the Bank do?I don't think it needs to do anything now. Yes, the CBI wants a cut but then it has a history of calling for cheap money. Businesses in general borrow and they want to do so at the cheapest rate There are two complications which suggest caution. The figures are a bit bumpy, with industrial production weak, service industries doing OK and retailing recovering a touch but pretty soft.