:00:00. > :00:07.This is Business Live from the BBC with Sally Bundock and Ben Thompson.
:00:08. > :00:13.Today's the day America's Central Bank prepares to raise
:00:14. > :00:17.But what does this mean businesses, consumers and the global economy?
:00:18. > :00:20.Live from London, that's our top story today,
:00:21. > :00:42.You have to go back to 2006 for the last time
:00:43. > :00:57.Some stockbrokers had to provide training to younger members of
:00:58. > :01:02.staff. Also in the programme,
:01:03. > :01:04.from Handbags to Haute couture, Prada has enjoyed huge success
:01:05. > :01:18.in recent years as the appetite A strong day in Asia followed
:01:19. > :01:23.through to Europe. We will keep you across every twist and turn as we
:01:24. > :01:27.ready for that decision in Washington.
:01:28. > :01:30.What does a slump in commodity prices mean for the firms that
:01:31. > :01:35.extract and sell oil, gas and metals. I sat down with the Chairman
:01:36. > :01:41.of one company to get the inside track of a company that began
:01:42. > :01:51.trading scrap metal, but took him to the top of a multibillion giant.
:01:52. > :01:59.Today, we want to know what's the best invention of the last decade or
:02:00. > :02:04.the most significant change? Use the hashtag BBC Biz Live.
:02:05. > :02:15.So this is it, nearly every financial expert out there is saying
:02:16. > :02:22.We are talking about a rise in interest rates
:02:23. > :02:37.Since December of 2008 the cost of borrowing there has been held
:02:38. > :02:41.But Federal Reserve chief Janet Yellen has strongly hinted
:02:42. > :02:47.that now is the time to make the change.
:02:48. > :02:51.As you can see, you have to go all the way back to June 2006
:02:52. > :02:53.to find the last time the Fed raised its key interest rate.
:02:54. > :02:56.Well, the cost of borrowing was originally lowered
:02:57. > :02:58.during the financial crisis to support banks
:02:59. > :03:01.By making borrowing cheaper it helps to encourage
:03:02. > :03:04.However, as an economy picks up so can inflation,
:03:05. > :03:07.and with the recovery in the US now looking firmer interest rates
:03:08. > :03:10.are likely to go up by a little today with further gradual increases
:03:11. > :03:19.Our business editor Kamal Ahmed is with me.
:03:20. > :03:26.Kamal, I don't know what's been hyped more, the new Star Wars film
:03:27. > :03:30.or the interest rates decision that we expect today. Talk us through the
:03:31. > :03:36.significance of this? This really is historic moment. Not since the
:03:37. > :03:41.financial crisis has any major Central Bank raised interest rates
:03:42. > :03:45.and certainly not in America. It is important because it really is a
:03:46. > :03:51.signal of economic strength and confidence in America that if Janet
:03:52. > :03:55.Yellen does raise interest rates this evening that the American
:03:56. > :03:59.economy is performing well and therefore, is able to have a more
:04:00. > :04:04.normal monetary policy. We have been in the monetary policy experiment
:04:05. > :04:07.basically since the financial crisis and also it will have huge effects
:04:08. > :04:12.on the global economy. So what will it mean for emerging markets? Their
:04:13. > :04:15.debts denominated in dollars will become more expensive. What will it
:04:16. > :04:19.mean for economies of Brazil and Turkey? What does it mean for
:04:20. > :04:23.currencies? It will lead to a strengthening of the dollar, but
:04:24. > :04:28.possibly a weakening of other global currencies, the yen, the euro in
:04:29. > :04:32.particular and what does it mean for the big flows of capital around the
:04:33. > :04:36.world? Big global investors are looking for return on the capital
:04:37. > :04:41.they invest and America suddenly becomes more attractive. It is a
:04:42. > :04:45.higher interest rate economy. Money could start flowing into America and
:04:46. > :04:49.away from Japan and like Europe and like emerging markets. The economic
:04:50. > :04:52.picture is very different since the Fed last met and I think it is fair
:04:53. > :04:56.to say they have talked themselves into a corner whereby all the
:04:57. > :04:59.expectation is that today is the day that they will do it even though the
:05:00. > :05:03.economic picture is very different. I suppose it strikes me that they
:05:04. > :05:12.will be about managing the fall-out and managing the expectation
:05:13. > :05:15.expectation as a result of this? Today's increase will only be a
:05:16. > :05:20.small increase if it is the increase that we all expect and Janet Yellen
:05:21. > :05:25.will be keen to say this is what is described as a dovish hike. When the
:05:26. > :05:30.federal verve starts tightening monetary policy, it is done so
:05:31. > :05:34.aggressively. Interest rate rises follow interest rate rise at every
:05:35. > :05:37.single meeting. This time, I think, that is less likely. I think she
:05:38. > :05:45.will be signalling, if she does agree to a rate rise, that the rate
:05:46. > :05:47.rises will be slow and will not hit the prefinancial crisis levels of
:05:48. > :05:52.interest rates what we were used to. The new normal is a far lower
:05:53. > :05:56.interest rate environment in general. If she does raise rates,
:05:57. > :05:59.she will be in reassurance mode about how quickly those rates will
:06:00. > :06:04.rise in the future. And what do you think about the
:06:05. > :06:09.timing Kamal? Many say this should have happened months ago. They
:06:10. > :06:14.should have got on with it and we could get used to, markets and
:06:15. > :06:21.economies some, but some are saying that today shouldn't be the day, it
:06:22. > :06:25.should be next year? We are here in September thinking the Federal
:06:26. > :06:28.Reserve would raise rates and they didn't and that was because there
:06:29. > :06:33.were concerns about China and the China slow down. The market feeling
:06:34. > :06:38.is she should get on with it now the signals have been so strong, that if
:06:39. > :06:43.she doesn't again, central banks have to communicate clearly what it
:06:44. > :06:46.is they want to do to maintain market stability and if she doesn't
:06:47. > :06:52.again and leaves it until the New Year, that's seen as more damaging
:06:53. > :06:57.than a small rate rise now. We are only talking about 0.25%. It is
:06:58. > :07:00.significant more almost for the political and economic message it
:07:01. > :07:09.sends rather than the actual effect of a small rate rise.
:07:10. > :07:13.Kamal, thank you. The Australian and British
:07:14. > :07:16.arms of the pizza giant, Dominos, are joining forces to buy
:07:17. > :07:20.a rival chain in Germany. The $49 million deal to acquire
:07:21. > :07:22.Joeys Pizza will create Germany's The deal will give Domino's more
:07:23. > :07:27.clout in the German market where it's struggled
:07:28. > :07:30.as a small operator. Forrest fires and haze pollution
:07:31. > :07:33.in Indonesia have cost the country That's more than twice the amount
:07:34. > :07:40.spent on reconstruction efforts after the 2004 Aceh tsunami,
:07:41. > :07:43.according to the World Bank's The bank says the cost of the fires
:07:44. > :07:47.this year amounted to 1.9% of Indonesia's gross
:07:48. > :07:49.domestic product. Rolls-Royce will revamp
:07:50. > :07:54.its management structure and recruit a chief operating officer in a bid
:07:55. > :07:56.to revive the ailing company. Tony Wood, the head of aerospace,
:07:57. > :07:59.will depart, and Lawrie Haynes, who runs the land and sea division,
:08:00. > :08:02.will step down next year. The changes, reported
:08:03. > :08:04.by the Financial Times, are expected to be
:08:05. > :08:09.announced on Wednesday. Removing the top layer
:08:10. > :08:26.of management is a bid Let's check-in with the Business
:08:27. > :08:28.Live page. It is dominated by the Fed potential rate decision that we
:08:29. > :08:36.may get later today. They are pointing out on the live page, a Fed
:08:37. > :08:42.rise nothing to get too excited about. We are talking a rate rise of
:08:43. > :08:45.25 basis points. 0.25%. The suggestion here that's not
:08:46. > :08:49.interesting until rates start rising to 1% or 1.5% and in context
:08:50. > :08:53.remember the Bank of England interest rate is only 0.5% and no
:08:54. > :08:57.one has been calling for rates to be cut. I want to take you to a story,
:08:58. > :09:01.the Bank of England has been assessing what would happen if
:09:02. > :09:05.interest rates in the UK were to rise and what it would mean for
:09:06. > :09:10.households and borrowers. Well, they have said if they were borrowing
:09:11. > :09:13.money, 55% would cut the amount of money they spent as a result of a
:09:14. > :09:17.rate hike. Savers said half of them would do nothing because interest
:09:18. > :09:22.rates for savers have been so low for so long, not very excited by a
:09:23. > :09:26.potential offering of 2%. Quite a few viewers have been
:09:27. > :09:29.getting in touch, talking about the fact that interest rates going up is
:09:30. > :09:34.great for savers who have been, you know, languishing with low rates for
:09:35. > :09:43.many, many years. Let's mention the story we touched
:09:44. > :09:46.on earlier. Prada, disastrous numbers coming from the company.
:09:47. > :09:57.What's going wrong for Prada? The slowing growth in China, that's
:09:58. > :10:02.having an impact and not just on Prada, but other luxury brands as
:10:03. > :10:11.well. For Prada profits and the most recent quarter falling by almost 40%
:10:12. > :10:14.and not just a slowdown in growth, but a crackdown on spending and
:10:15. > :10:19.lavish spending by officials, all a That is taking its toll and it is
:10:20. > :10:27.sending its shares down to a record low level, down 6.5% today or down
:10:28. > :10:32.nearly 40% from its IPO price. Also a strong Hong Kong dollar is having
:10:33. > :10:34.an impact as well because Hong Kong has traditionally been the
:10:35. > :10:40.destination for mainland shoppers to go and spend their money, but a
:10:41. > :10:45.strong Hong Kong dollar made Hong Kong a very expensive destination.
:10:46. > :10:49.Thank you. Not a good day for Prada on the
:10:50. > :10:53.financial markets, but the markets across Asia had a bumper session. It
:10:54. > :10:59.follows a similar situation on Wall Street the night before. Japan
:11:00. > :11:04.closing up 2.5% today. Hong Kong up 2% and this is being felt to a
:11:05. > :11:07.degree in Europe. Not such strong gains for share markets in Europe
:11:08. > :11:13.today. Most of the markets in Europe closed up over 3% yesterday. So most
:11:14. > :11:18.of that gains was done on Tuesday. Today, though, the FTSE got its head
:11:19. > :11:23.above water. All markets trading very ten tatively ahead of that
:11:24. > :11:27.decision in the US just to say oil is still at multiyear lows and the
:11:28. > :11:30.dollar weakening a bit today too. Ben back to you.
:11:31. > :11:34.Joining us is Richard Dunbar from Aberdeen Asset Management.
:11:35. > :11:39.Richard welcome. Let's talk Fed, but in a bit of context because all eyes
:11:40. > :11:43.are clearly on America's Central Bank about what it will do today.
:11:44. > :11:46.The numbers will be in a holding pattern until we get some news, but
:11:47. > :11:50.it is interesting if you contrast it with what the European Central Bank
:11:51. > :11:59.did last week and it is a very different response to what are
:12:00. > :12:05.different economic climates. The European Central Bank were expected
:12:06. > :12:15.to cut interest rates and they didn't do that. Contrast that with
:12:16. > :12:19.the United States where Janet Yellen is likely to outline a view of a
:12:20. > :12:23.strong US economy and a more Sangin view of what is going on in the rest
:12:24. > :12:28.of the world which might be supported from what we saw from the
:12:29. > :12:34.ECB and what we saw in Asia and in other parts of the world. What do
:12:35. > :12:40.you think is going to happen tomorrow when we get the rate rise?
:12:41. > :12:44.It is priced in. We have known about this and prepared for it for a long
:12:45. > :12:47.time, but we're coming into the Christmas silly season as well, it
:12:48. > :12:53.is slow and markets in the western world are slowing down and heading
:12:54. > :12:56.to a long holiday break? If Janet Yellen raises rates tonight, that's
:12:57. > :12:59.what everyone in the market expects. So the surprise would be if she does
:13:00. > :13:02.anything different or if there is anything in the statement that
:13:03. > :13:08.surprises markets either about the size of the rise or indeed, the
:13:09. > :13:13.trajectory of rate increases. That would be the major surprise the we
:13:14. > :13:17.are looking what her view is what's going on in the rest of the world
:13:18. > :13:22.and that may inform investors as to how the path over the next few weeks
:13:23. > :13:25.and months may go. One we will watch closely, Richard, thank you very
:13:26. > :13:30.much. At any other time, you might think the economic data would
:13:31. > :13:33.suggest a rate rise. But they have almost backed themselves into a
:13:34. > :13:39.corner where they have to do it now. in commodity prices is taking its
:13:40. > :13:41.toll on the world's mining giants. The boss of Vedanta told me how he's
:13:42. > :13:44.weathering the storm, and why his first job,
:13:45. > :13:46.selling scrap metal, If you're hoping to get your cards
:13:47. > :14:01.and presents delivered before Christmas, you're fast
:14:02. > :14:04.running out of time. Royal Mail staff are trying to make
:14:05. > :14:07.sure millions of letters and parcels get to their destination
:14:08. > :14:09.before the big day. Steph is at a sorting office
:14:10. > :14:13.in Sutton Coldfield. Steph, we're sending fewer
:14:14. > :14:15.and fewer cards every year, but it's online shopping
:14:16. > :14:30.and all the parcels that Good morning everyone. Yes, it is.
:14:31. > :14:35.We are not seeing as many letters, but it is a very big day for Royal
:14:36. > :14:40.Mail. The busiest for them. In this sorting office they are expecting to
:14:41. > :14:43.be delivering 160,000 letters and that's 60 more than your typical
:14:44. > :14:46.Wednesday, but as you said Ben, it is about parcels because there has
:14:47. > :14:49.been a decline in the number of letters that are being sent, but an
:14:50. > :14:55.increase in the parcels and this area around me was really busy
:14:56. > :14:59.earlier on with the posties getting ready to get the parcels out and ten
:15:00. > :15:04.million parcels will be delivered today alone. We can grab a word with
:15:05. > :15:13.the posties. Lynn, tell me about how it is going this time of year for
:15:14. > :15:18.you. It's so busy, so stressful but we try and work as a team and help
:15:19. > :15:24.each other out for you. You have been in this business for over 40
:15:25. > :15:31.years, have you seen a change? Letters have gone down a lot, there
:15:32. > :15:34.are small packets now, but definitely, postcards, Christmas
:15:35. > :15:38.cards have really gone downhill. It's about the big parcels you have
:15:39. > :15:42.to deliver, I'm going to let you get on with it and I'm holding you back,
:15:43. > :15:49.I have been a pain, getting in everyone's way! This operation is
:15:50. > :15:53.all about hand sorting and automation and there are machines
:15:54. > :15:57.over the other side, they will also be sorting things because automation
:15:58. > :16:01.is a key part of this, something that Royal Mail are trying to do to
:16:02. > :16:06.increase the efficiency and bring down the costs of the business. If
:16:07. > :16:14.you have any post to send, get it in soon! Always good to be reminded! I
:16:15. > :16:21.have a tonne of cards in my bag, I'm feeling good about that. And if it
:16:22. > :16:23.doesn't arrive on time, you know you can blame Steph! I just want to show
:16:24. > :16:28.you this on the website, an interview with Mark Carney, whether
:16:29. > :16:33.landlords will sell if prices fall. You're watching Business
:16:34. > :16:44.Live - our top story: Of course, the big day, the Fed
:16:45. > :16:48.reserve in the US is expected to raise interest rates, we are right
:16:49. > :16:56.across it for you throughout the day, online, on radio and the telly!
:16:57. > :16:59.This could be big news around the world for commodities, stock markets
:17:00. > :17:02.and for the value of the dollar and sterling and other currencies.
:17:03. > :17:04.It's been a volatile week, to say the least,
:17:05. > :17:07.Oil dipped below $37 a barrel and other energy
:17:08. > :17:13.And we've already seen the impact that's having on firms like Shell
:17:14. > :17:16.and Exxon - they, along with rivals, have cut spending, investment
:17:17. > :17:23.But what about miners and metals firms?
:17:24. > :17:26.As well as oil, Iron and aluminium have taken a battering
:17:27. > :17:28.on the markets in recent months due to oversupply and slowing
:17:29. > :17:34.One company that has seen its share prices tumble as a consequence
:17:35. > :17:37.is the London listed, but Indian owned, Vedanta Resource.
:17:38. > :17:41.The firm was founded in 1976 by current chairman Anil Agarwal,
:17:42. > :17:52.who still owns over 60% of the company.
:17:53. > :18:00.after leaving school at just 15 to trade scrap metal,
:18:01. > :18:04.he has risen to become India's 24th richest person with a fortune
:18:05. > :18:09.Well a little earlier I caught up with Mr Agrawal,
:18:10. > :18:12.and asked him about how he manages a business that has to cope
:18:13. > :18:16.with highly volatile raw material prices.
:18:17. > :18:27.The whole world is in slump but India is growing, double digit, so
:18:28. > :18:34.it is an exciting time. Of course, the prices have come down, so we
:18:35. > :18:39.have to tighten our belts but going forward, being in a geographical
:18:40. > :18:45.location that India helps us. You've talked about being more efficient in
:18:46. > :18:48.the day-to-day operation, has that manifest itself on the ground, what
:18:49. > :18:55.are you telling your teams on the ground? You have a budget to spend
:18:56. > :18:59.on your holiday copies of the work at everything in that so today you
:19:00. > :19:04.have a commodity price which is this and within that, you have to work
:19:05. > :19:14.out everything, this is the money we have, this is the cost we can
:19:15. > :19:19.afford, our cost has been reduced, our teams are working better. The
:19:20. > :19:24.other part, we have been spending a couple of billion dollars every year
:19:25. > :19:29.to build the plant and expand it. The share prices down from ?30 a
:19:30. > :19:37.share in 2010 two maybe ?6 today. What do you shareholders tell you,
:19:38. > :19:44.what is your responsibility towards you see such a significant fall? It
:19:45. > :19:50.has gone to almost ten times, people have made a lot of money, we have
:19:51. > :19:58.given them, what I have raised, more than three times back to them, so I
:19:59. > :20:01.did what I'm supposed to do. Does it worry you when you see a share price
:20:02. > :20:06.fall like that. Other business leaders have said it doesn't reflect
:20:07. > :20:09.the reality on the ground but equally you say it is the perception
:20:10. > :20:14.of the shareholders, that they want to invest or they don't, are you
:20:15. > :20:23.worried by such a significant fall? I don't worry because among my
:20:24. > :20:30.peers, I do better so that confidence is there, and the
:20:31. > :20:37.geographical location. Today, I am focused on my company and innovation
:20:38. > :20:43.and technology, I am working on exploration with the best technology
:20:44. > :20:46.in the world. What concessions do you have with local people if you
:20:47. > :20:51.want to open a plant in an area and they have environmental concerns?
:20:52. > :20:59.What do you tell them? To be transparent. There are so much of
:21:00. > :21:10.pro at this point in time, in India, we have almost 3000, they just want
:21:11. > :21:19.to start a factory. We have a high standard of environment, we have to
:21:20. > :21:21.make sure we follow that. The two things mutually exclusive,
:21:22. > :21:27.Environmental Protection Agency economic growth? Can you have the
:21:28. > :21:32.same things? Absolutely, today's technology is amazing. 50 years
:21:33. > :21:38.back, things were different, it just requires discipline. And without
:21:39. > :21:48.industry, you can't progress. So once you balance that, there are
:21:49. > :21:54.norms. 102 to 105. Within those norms, you have to make sure you
:21:55. > :21:56.stand by. You have made a lot of decisions in your long career, was
:21:57. > :22:04.there any point you wanted to give up? As a human being, these things
:22:05. > :22:12.come, but I have my father, who is a very strong... You can go to him,
:22:13. > :22:21.put your head on his shoulder, he says, you can do it. Try one
:22:22. > :22:27.wartime. -- try one more time. Get your work done, Pat your people on
:22:28. > :22:35.the back. And this kind of word helps and you start again. Speaking
:22:36. > :22:43.to me about the indications of falling commodity prices.
:22:44. > :22:51.One of the consequences as well is investment coming out of those
:22:52. > :22:54.Middle Eastern, oil-rich nations, not so oil-rich anymore, in terms of
:22:55. > :23:00.property in places like London, that's going down. There are lots of
:23:01. > :23:04.wealthy individuals and sovereign wealth funds, read oil and
:23:05. > :23:12.resources, with prices having more than halved over the last couple of
:23:13. > :23:16.years, that source of investment, is much less than it was, we are seeing
:23:17. > :23:23.that in fairly significant amount of the moment. Perhaps it will come
:23:24. > :23:28.from other sources, beneficiaries of lower oil prices and other metals
:23:29. > :23:33.prices may be the ones that step up to the plate. We tend to think it is
:23:34. > :23:38.just high end property but we should remember that has huge repercussions
:23:39. > :23:40.all the way down the chain, if the top end of the market is suffering,
:23:41. > :23:46.that has invitations for everybody in the middle, falling oil price has
:23:47. > :23:51.huge imprecations in areas you wouldn't expect. We are seeing that
:23:52. > :23:55.in London, the top end of the market is weakening and that is having
:23:56. > :23:59.ripple effects further down. There are worries at the bottom end of the
:24:00. > :24:06.market. Mark Carney is talking about the buy to let market, there are
:24:07. > :24:10.worries in that end. Starbucks is in a lot of the press today, it
:24:11. > :24:16.released its results is today and in that news, there was the information
:24:17. > :24:24.about the tax paid. UK corporation tax of ?8.1 million. That's nearly
:24:25. > :24:30.matches total contributions paid over the past 14 years, a long time
:24:31. > :24:35.coming. We continue to focus on the tax that multinational companies are
:24:36. > :24:38.either paid or in many cases not paying, I suspect that focus will
:24:39. > :24:48.continue but in this case, Starbucks sales are down on the year, profits
:24:49. > :24:52.are up, around 30 million. I suspect they are up to two accounting
:24:53. > :24:57.changes, they made 30 million profit rather than 8 million survey are
:24:58. > :25:01.paying a higher rate of tax than the standard corporation tax, but I
:25:02. > :25:05.expect the executives will be more concerned about the falling top one
:25:06. > :25:08.and the prospects for the profit line and we should be concerned
:25:09. > :25:14.about the profits for the tax line as recipients of that tax. I just
:25:15. > :25:17.wondered if the negative press surrounding them with regards to
:25:18. > :25:20.this issue has affected sales, because some believe it has, people
:25:21. > :25:24.have chosen to get their copy somewhere else. It's hard to say but
:25:25. > :25:29.anecdotally there are many consumers who if they have a choice and there
:25:30. > :25:35.is plenty of choice as to where one takes 1's cup of coffee, some will
:25:36. > :25:38.choose other venues. It is hard to determine at what the tax they are
:25:39. > :25:42.played on what profit, the company are appearing the pay a fair tax but
:25:43. > :25:48.we have no clue whether the profits on which the paid is fairly stated.
:25:49. > :25:55.Accounting is art as well as science so the bigger is open to debate.
:25:56. > :26:09.Great to have you on the show. We will see you soon.
:26:10. > :26:13.The warm coats, scarf and gloves can stay in the cupboard today, a very
:26:14. > :26:14.mild day