Good morning. Today we're talking about interest rate cuts, stock market turbulence and Rolls-Royce’s revival.

Big Stories

Rates finally cut

The Bank of England (BoE) has bucked the trend of recent global monetary policy by cutting interest rates for the first time since 2020. The decision to drop rates to 5% from a 16-year high of 5.25% marks a divergence from central banks like the US Federal Reserve, which is expected to cut rates in the near future, and the Bank of Japan, which recently raised its interest rate. The BoE's move reflects a growing optimism about the UK economy, with the central bank upgrading its growth forecasts. However, the decision was not unanimous, highlighting the ongoing debate about the appropriate monetary policy stance in the face of lingering inflationary pressures. This rate cut is likely to provide some relief to mortgage holders and stimulate economic activity. However, its impact on inflation and broader economic conditions will be closely monitored in the coming months.

Stock markets rattled

A sharp downturn in the US labour market has ignited fears of a looming recession, triggering a global sell-off in stock markets. The unexpected surge in unemployment and weaker-than-expected job growth have heightened investor anxiety over the Federal Reserve's monetary policy stance. Markets are now pricing in a more aggressive rate cut from the US central bank in an attempt to stimulate economic activity. However, the rapid shift in sentiment has caught investors off guard, leading to significant losses across major indices. The tech sector has also been impacted, with mixed performance among leading companies. While Facebook owner Meta Platforms reported better-than-expected earnings, fuelled by AI investments, Nvidia's stock experienced extreme volatility, highlighting the overall market uncertainty.

Rolls Royce revival

Aerospace giant Rolls-Royce has announced it will distribute £700 worth of shares to each of its 42,000 employees. The move comes as a reward for the Derby-based company's improving financial performance, with profits nearly doubling in the first half of the year compared to the previous year. The share distribution, totaling approximately £30m, is part of a broader strategy to recognise employees' contributions to the company's recovery from the COVID-19 pandemic. The engine maker experienced significant financial challenges during the pandemic due to a sharp decline in global air travel, which negatively impacted its core commercial aerospace business. CEO Tufan Erginbilgic launched a transformation programme in January 2023 shortly after his appointment, describing the struggling firm as a "burning platform" and telling staff they faced a "last chance" to change. Under Erginbilgic’s leadership Rolls-Royce has implemented a series of cost-cutting measures and operational improvements, leading to a strong financial performance.

Elsewhere...

AI U turn: Labour has pulled £1.3bn of investment in tech and AI projects promised by the previous Conservative government.

Tech job cuts: US chip-maker Intel has said it plans to cut more than 15,000 job cuts as it seeks to revive the business and catch up with competitors.

Loop Likes

• 10 everyday bad habits that hurt your longevity

• How to adopt an Olympian mindset

• How to dress for a heatwave and still look stylish

Number of the Day

1.5 million

The number of new homes the Labour government has pledged to build by 2029.

Not a subscriber? Sign up for free

Want to reach an audience of UK business leaders, young professionals and 2,000+ other smart, ambitious people? Reply to this email and we'll be in touch.