16/12/2015 BBC Business Live

This is Business Live from the BBC with Sally Bundock and Ben Thompson.

Today's the day America's Central Bank prepares to raise

But what does this mean businesses, consumers and the global economy?

Live from London, that's our top story today,

You have to go back to 2006 for the last time

Some stockbrokers had to provide training to younger members of

staff. Also in the programme,

from Handbags to Haute couture, Prada has enjoyed huge success

in recent years as the appetite A strong day in Asia followed

through to Europe. We will keep you across every twist and turn as we

ready for that decision in Washington.

What does a slump in commodity prices mean for the firms that

extract and sell oil, gas and metals. I sat down with the Chairman

of one company to get the inside track of a company that began

trading scrap metal, but took him to the top of a multibillion giant.

Today, we want to know what's the best invention of the last decade or

the most significant change? Use the hashtag BBC Biz Live.

So this is it, nearly every financial expert out there is saying

We are talking about a rise in interest rates

Since December of 2008 the cost of borrowing there has been held

But Federal Reserve chief Janet Yellen has strongly hinted

that now is the time to make the change.

As you can see, you have to go all the way back to June 2006

to find the last time the Fed raised its key interest rate.

Well, the cost of borrowing was originally lowered

during the financial crisis to support banks

By making borrowing cheaper it helps to encourage

However, as an economy picks up so can inflation,

and with the recovery in the US now looking firmer interest rates

are likely to go up by a little today with further gradual increases

Our business editor Kamal Ahmed is with me.

Kamal, I don't know what's been hyped more, the new Star Wars film

or the interest rates decision that we expect today. Talk us through the

significance of this? This really is historic moment. Not since the

financial crisis has any major Central Bank raised interest rates

and certainly not in America. It is important because it really is a

signal of economic strength and confidence in America that if Janet

Yellen does raise interest rates this evening that the American

economy is performing well and therefore, is able to have a more

normal monetary policy. We have been in the monetary policy experiment

basically since the financial crisis and also it will have huge effects

on the global economy. So what will it mean for emerging markets? Their

debts denominated in dollars will become more expensive. What will it

mean for economies of Brazil and Turkey? What does it mean for

currencies? It will lead to a strengthening of the dollar, but

possibly a weakening of other global currencies, the yen, the euro in

particular and what does it mean for the big flows of capital around the

world? Big global investors are looking for return on the capital

they invest and America suddenly becomes more attractive. It is a

higher interest rate economy. Money could start flowing into America and

away from Japan and like Europe and like emerging markets. The economic

picture is very different since the Fed last met and I think it is fair

to say they have talked themselves into a corner whereby all the

expectation is that today is the day that they will do it even though the

economic picture is very different. I suppose it strikes me that they

will be about managing the fall-out and managing the expectation

expectation as a result of this? Today's increase will only be a

small increase if it is the increase that we all expect and Janet Yellen

will be keen to say this is what is described as a dovish hike. When the

federal verve starts tightening monetary policy, it is done so

aggressively. Interest rate rises follow interest rate rise at every

single meeting. This time, I think, that is less likely. I think she

will be signalling, if she does agree to a rate rise, that the rate

rises will be slow and will not hit the prefinancial crisis levels of

interest rates what we were used to. The new normal is a far lower

interest rate environment in general. If she does raise rates,

she will be in reassurance mode about how quickly those rates will

rise in the future. And what do you think about the

timing Kamal? Many say this should have happened months ago. They

should have got on with it and we could get used to, markets and

economies some, but some are saying that today shouldn't be the day, it

should be next year? We are here in September thinking the Federal

Reserve would raise rates and they didn't and that was because there

were concerns about China and the China slow down. The market feeling

is she should get on with it now the signals have been so strong, that if

she doesn't again, central banks have to communicate clearly what it

is they want to do to maintain market stability and if she doesn't

again and leaves it until the New Year, that's seen as more damaging

than a small rate rise now. We are only talking about 0.25%. It is

significant more almost for the political and economic message it

sends rather than the actual effect of a small rate rise.

Kamal, thank you. The Australian and British

arms of the pizza giant, Dominos, are joining forces to buy

a rival chain in Germany. The $49 million deal to acquire

Joeys Pizza will create Germany's The deal will give Domino's more

clout in the German market where it's struggled

as a small operator. Forrest fires and haze pollution

in Indonesia have cost the country That's more than twice the amount

spent on reconstruction efforts after the 2004 Aceh tsunami,

according to the World Bank's The bank says the cost of the fires

this year amounted to 1.9% of Indonesia's gross

domestic product. Rolls-Royce will revamp

its management structure and recruit a chief operating officer in a bid

to revive the ailing company. Tony Wood, the head of aerospace,

will depart, and Lawrie Haynes, who runs the land and sea division,

will step down next year. The changes, reported

by the Financial Times, are expected to be

announced on Wednesday. Removing the top layer

of management is a bid Let's check-in with the Business

Live page. It is dominated by the Fed potential rate decision that we

may get later today. They are pointing out on the live page, a Fed

rise nothing to get too excited about. We are talking a rate rise of

25 basis points. 0.25%. The suggestion here that's not

interesting until rates start rising to 1% or 1.5% and in context

remember the Bank of England interest rate is only 0.5% and no

one has been calling for rates to be cut. I want to take you to a story,

the Bank of England has been assessing what would happen if

interest rates in the UK were to rise and what it would mean for

households and borrowers. Well, they have said if they were borrowing

money, 55% would cut the amount of money they spent as a result of a

rate hike. Savers said half of them would do nothing because interest

rates for savers have been so low for so long, not very excited by a

potential offering of 2%. Quite a few viewers have been

getting in touch, talking about the fact that interest rates going up is

great for savers who have been, you know, languishing with low rates for

many, many years. Let's mention the story we touched

on earlier. Prada, disastrous numbers coming from the company.

What's going wrong for Prada? The slowing growth in China, that's

having an impact and not just on Prada, but other luxury brands as

well. For Prada profits and the most recent quarter falling by almost 40%

and not just a slowdown in growth, but a crackdown on spending and

lavish spending by officials, all a That is taking its toll and it is

sending its shares down to a record low level, down 6.5% today or down

nearly 40% from its IPO price. Also a strong Hong Kong dollar is having

an impact as well because Hong Kong has traditionally been the

destination for mainland shoppers to go and spend their money, but a

strong Hong Kong dollar made Hong Kong a very expensive destination.

Thank you. Not a good day for Prada on the

financial markets, but the markets across Asia had a bumper session. It

follows a similar situation on Wall Street the night before. Japan

closing up 2.5% today. Hong Kong up 2% and this is being felt to a

degree in Europe. Not such strong gains for share markets in Europe

today. Most of the markets in Europe closed up over 3% yesterday. So most

of that gains was done on Tuesday. Today, though, the FTSE got its head

above water. All markets trading very ten tatively ahead of that

decision in the US just to say oil is still at multiyear lows and the

dollar weakening a bit today too. Ben back to you.

Joining us is Richard Dunbar from Aberdeen Asset Management.

Richard welcome. Let's talk Fed, but in a bit of context because all eyes

are clearly on America's Central Bank about what it will do today.

The numbers will be in a holding pattern until we get some news, but

it is interesting if you contrast it with what the European Central Bank

did last week and it is a very different response to what are

different economic climates. The European Central Bank were expected

to cut interest rates and they didn't do that. Contrast that with

the United States where Janet Yellen is likely to outline a view of a

strong US economy and a more Sangin view of what is going on in the rest

of the world which might be supported from what we saw from the

ECB and what we saw in Asia and in other parts of the world. What do

you think is going to happen tomorrow when we get the rate rise?

It is priced in. We have known about this and prepared for it for a long

time, but we're coming into the Christmas silly season as well, it

is slow and markets in the western world are slowing down and heading

to a long holiday break? If Janet Yellen raises rates tonight, that's

what everyone in the market expects. So the surprise would be if she does

anything different or if there is anything in the statement that

surprises markets either about the size of the rise or indeed, the

trajectory of rate increases. That would be the major surprise the we

are looking what her view is what's going on in the rest of the world

and that may inform investors as to how the path over the next few weeks

and months may go. One we will watch closely, Richard, thank you very

much. At any other time, you might think the economic data would

suggest a rate rise. But they have almost backed themselves into a

corner where they have to do it now. in commodity prices is taking its

toll on the world's mining giants. The boss of Vedanta told me how he's

weathering the storm, and why his first job,

selling scrap metal, If you're hoping to get your cards

and presents delivered before Christmas, you're fast

running out of time. Royal Mail staff are trying to make

sure millions of letters and parcels get to their destination

before the big day. Steph is at a sorting office

in Sutton Coldfield. Steph, we're sending fewer

and fewer cards every year, but it's online shopping

and all the parcels that Good morning everyone. Yes, it is.

We are not seeing as many letters, but it is a very big day for Royal

Mail. The busiest for them. In this sorting office they are expecting to

be delivering 160,000 letters and that's 60 more than your typical

Wednesday, but as you said Ben, it is about parcels because there has

been a decline in the number of letters that are being sent, but an

increase in the parcels and this area around me was really busy

earlier on with the posties getting ready to get the parcels out and ten

million parcels will be delivered today alone. We can grab a word with

the posties. Lynn, tell me about how it is going this time of year for

you. It's so busy, so stressful but we try and work as a team and help

each other out for you. You have been in this business for over 40

years, have you seen a change? Letters have gone down a lot, there

are small packets now, but definitely, postcards, Christmas

cards have really gone downhill. It's about the big parcels you have

to deliver, I'm going to let you get on with it and I'm holding you back,

I have been a pain, getting in everyone's way! This operation is

all about hand sorting and automation and there are machines

over the other side, they will also be sorting things because automation

is a key part of this, something that Royal Mail are trying to do to

increase the efficiency and bring down the costs of the business. If

you have any post to send, get it in soon! Always good to be reminded! I

have a tonne of cards in my bag, I'm feeling good about that. And if it

doesn't arrive on time, you know you can blame Steph! I just want to show

you this on the website, an interview with Mark Carney, whether

landlords will sell if prices fall. You're watching Business

Live - our top story: Of course, the big day, the Fed

reserve in the US is expected to raise interest rates, we are right

across it for you throughout the day, online, on radio and the telly!

This could be big news around the world for commodities, stock markets

and for the value of the dollar and sterling and other currencies.

It's been a volatile week, to say the least,

Oil dipped below $37 a barrel and other energy

And we've already seen the impact that's having on firms like Shell

and Exxon - they, along with rivals, have cut spending, investment

But what about miners and metals firms?

As well as oil, Iron and aluminium have taken a battering

on the markets in recent months due to oversupply and slowing

One company that has seen its share prices tumble as a consequence

is the London listed, but Indian owned, Vedanta Resource.

The firm was founded in 1976 by current chairman Anil Agarwal,

who still owns over 60% of the company.

after leaving school at just 15 to trade scrap metal,

he has risen to become India's 24th richest person with a fortune

Well a little earlier I caught up with Mr Agrawal,

and asked him about how he manages a business that has to cope

with highly volatile raw material prices.

The whole world is in slump but India is growing, double digit, so

it is an exciting time. Of course, the prices have come down, so we

have to tighten our belts but going forward, being in a geographical

location that India helps us. You've talked about being more efficient in

the day-to-day operation, has that manifest itself on the ground, what

are you telling your teams on the ground? You have a budget to spend

on your holiday copies of the work at everything in that so today you

have a commodity price which is this and within that, you have to work

out everything, this is the money we have, this is the cost we can

afford, our cost has been reduced, our teams are working better. The

other part, we have been spending a couple of billion dollars every year

to build the plant and expand it. The share prices down from ?30 a

share in 2010 two maybe ?6 today. What do you shareholders tell you,

what is your responsibility towards you see such a significant fall? It

has gone to almost ten times, people have made a lot of money, we have

given them, what I have raised, more than three times back to them, so I

did what I'm supposed to do. Does it worry you when you see a share price

fall like that. Other business leaders have said it doesn't reflect

the reality on the ground but equally you say it is the perception

of the shareholders, that they want to invest or they don't, are you

worried by such a significant fall? I don't worry because among my

peers, I do better so that confidence is there, and the

geographical location. Today, I am focused on my company and innovation

and technology, I am working on exploration with the best technology

in the world. What concessions do you have with local people if you

want to open a plant in an area and they have environmental concerns?

What do you tell them? To be transparent. There are so much of

pro at this point in time, in India, we have almost 3000, they just want

to start a factory. We have a high standard of environment, we have to

make sure we follow that. The two things mutually exclusive,

Environmental Protection Agency economic growth? Can you have the

same things? Absolutely, today's technology is amazing. 50 years

back, things were different, it just requires discipline. And without

industry, you can't progress. So once you balance that, there are

norms. 102 to 105. Within those norms, you have to make sure you

stand by. You have made a lot of decisions in your long career, was

there any point you wanted to give up? As a human being, these things

come, but I have my father, who is a very strong... You can go to him,

put your head on his shoulder, he says, you can do it. Try one

wartime. -- try one more time. Get your work done, Pat your people on

the back. And this kind of word helps and you start again. Speaking

to me about the indications of falling commodity prices.

One of the consequences as well is investment coming out of those

Middle Eastern, oil-rich nations, not so oil-rich anymore, in terms of

property in places like London, that's going down. There are lots of

wealthy individuals and sovereign wealth funds, read oil and

resources, with prices having more than halved over the last couple of

years, that source of investment, is much less than it was, we are seeing

that in fairly significant amount of the moment. Perhaps it will come

from other sources, beneficiaries of lower oil prices and other metals

prices may be the ones that step up to the plate. We tend to think it is

just high end property but we should remember that has huge repercussions

all the way down the chain, if the top end of the market is suffering,

that has invitations for everybody in the middle, falling oil price has

huge imprecations in areas you wouldn't expect. We are seeing that

in London, the top end of the market is weakening and that is having

ripple effects further down. There are worries at the bottom end of the

market. Mark Carney is talking about the buy to let market, there are

worries in that end. Starbucks is in a lot of the press today, it

released its results is today and in that news, there was the information

about the tax paid. UK corporation tax of ?8.1 million. That's nearly

matches total contributions paid over the past 14 years, a long time

coming. We continue to focus on the tax that multinational companies are

either paid or in many cases not paying, I suspect that focus will

continue but in this case, Starbucks sales are down on the year, profits

are up, around 30 million. I suspect they are up to two accounting

changes, they made 30 million profit rather than 8 million survey are

paying a higher rate of tax than the standard corporation tax, but I

expect the executives will be more concerned about the falling top one

and the prospects for the profit line and we should be concerned

about the profits for the tax line as recipients of that tax. I just

wondered if the negative press surrounding them with regards to

this issue has affected sales, because some believe it has, people

have chosen to get their copy somewhere else. It's hard to say but

anecdotally there are many consumers who if they have a choice and there

is plenty of choice as to where one takes 1's cup of coffee, some will

choose other venues. It is hard to determine at what the tax they are

played on what profit, the company are appearing the pay a fair tax but

we have no clue whether the profits on which the paid is fairly stated.

Accounting is art as well as science so the bigger is open to debate.

Great to have you on the show. We will see you soon.

The warm coats, scarf and gloves can stay in the cupboard today, a very

mild day