the times | Thursday May 26 2022 2GM 37
Business
Callum Jones
US Business Correspondent
The Federal Reserve is set to continue
raising interest rates aggressively until
the autumn as policymakers try to bring
runaway US inflation under control.
Officials at the central bank have also
discussed moving to a “restrictive”
policy — potentially lifting rates to levels
that would slow the economy — in an at-
tempt to bring down price growth from
its highest level in a generation.
The Fed implemented its largest rate
rise in two decades this month, and
most of its officials expect further half-
point increases will be necessary this
summer, according to minutes from
their latest meeting released last night.
They believe such rises “would likely
be appropriate at the next couple of
meetings”, the minutes said. Many offi-
cials noted that swift action would leave
the central bank “well positioned” to
assess the impact later this year.
Policymakers judged that “it was im-
portant to move expeditiously to a
more neutral monetary policy stance”.
They also noted that a restrictive stance
of policy may well become appropriate
depending on the evolving economic
outlook.
The Fed hiked its benchmark federal
funds rate by half a percentage point for
the first time in 22 years earlier this
month, to between 0.75 per cent and
1 per cent, and announced it would start
shrinking its $9 trillion balance sheet.
Policymakers, who are due to meet
again in June and July, are walking a
tightrope as they try to cool price
growth without tipping the economy
into recession. All agreed that the US
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$113.71 (+0.33)Apr 22May 5 12 19 Apr 26 May 4 12 19 Apr 22 May 4 12 19 Apr 26 May 4 12 19 Apr 22May 4 12 19 Apr 22May 4 12 19Volkswagen has agreed a £193 million
settlement with more than 90,000 UK
car owners after the manufacturer
installed “defeat devices” to cheat anti-
pollution tests.
Lawyers for the largest group of Brit-
ish claimants in the scandal announced
yesterday that the deal had been agreed
with the German company, in a move
that is likely to see individual vehicle
Volkswagen agrees £193m UK settlement over diesel scandal
Jonathan Ames Legal Editor owners awarded on average more than
£2,100 each.
The company, which said in a state-
ment that it had not admitted liability, is
understood to have agreed to make a
separate payment to cover the claim-
ants’ legal fees and the costs of a com-
pany that funded the litigation.
Neither Slater & Gordon, the law firm
representing the largest claimant group
of about 70,000 owners, nor Therium,
the litigation funding company that fi-
nanced their case, would confirm the
amounts. A spokesman for the law firm
said the deal was confidential.
However, a litigation funding spe-
cialist has told The Times that VW was
likely to have to pay the funders and the
law firm £60 million.
The scandal emerged seven years
ago, when it was reported that VW had
installed devices to make its diesel vehi-
cles appear less polluting when they
were being assessed. Tests in the USfound that 482,000 VW diesel vehicles
emitted up to 40 times more pollution
than was permitted.
The company ultimately admitted
that 11 million cars worldwide, includ-
ing 8 million in Europe, had the devices
installed to help them comply with rig-
orous local environmental standards.
As of a year ago, VW had paid out
more than $35 billion in fines and pen-
alties as a result of having installed the
defeat mechanism.Announcing the settlement, Ben
Smyth, investment officer at Therium
Capital Management, said that “taking
legal action was the only way to ensure
that VW would be held to account for
allegedly misleading their customers
and cheating emissions guidelines to
the detriment of air quality and human
health”. VW said it took the oppor-
tunity of the settlement to “sincerely
apologise to their customers” for the
installation of the devices.Bank prepared to slow economy to tame inflation
Further rate
rises on the
way, says Fe d
economy was very strong, its labour
market “extremely tight” and inflation
“very high”, the minutes said. A “high
degree of uncertainty” continues to
cloud the outlook, however, and they
observed that “risk-management con-
siderations” would be important during
upcoming deliberations over policy.
Staff at the Fed see the risks with
price growth as “skewed to the upside”,
amid sustained supply constraints, the
war in Ukraine and strict lockdown re-
strictions imposed in parts of China.
April’s American inflation rate
slipped back slightly to 8.3 per cent
from March’s four-decade high of
8.5 per cent, but failed to moderate as
swiftly as economists had expected as
food bills, rent, airline fares and new-
car prices all rose. The Fed’s inflation
target is 2 per cent.
By the close on Wall Street, the S&P
500 had gained 1 per cent, or 37.25
points, to 3,978.74 as investors digested
the Fed minutes. The Dow Jones indus-
trial average advanced 0.6 per cent, or
191.7 points, to 32,120.28. The tech-fo-
cused Nasdaq climbed 1.51 per cent, or
170.3 points, to 11,434.74.
Yesterday, markets were pricing in a
93.3 per cent chance of a half-point rate
rise at the Fed’s next meeting, according
to CME’s FedWatch tool, and a 6.7 per
cent chance of a 0.75 per cent rise.
Paul Ashworth, chief US economist
at Capital Economics, said: “The [Fed]
minutes... bolster our forecast that offi-
cials will follow up the 50 basis-point
hike this month with similar hikes in
June and July... before switching back
to smaller 25bp increases in the fall.”
Rates must go higher — but it’s risky,
warns Bank economist, page 40GETTY IMAGESJD Sports boss is forced to quit
Ashley Armstrong Retail EditorJD Sports parted company with its
long-serving boss last night as its
majority shareholder finally ran out of
patience after a series of scandals.
Peter Cowgill has run JD Sports since
2004 and oversaw a tenfold increase in
the sports retailer’s value over the past
seven years after he fuelled its growth
with a series of international
acquisitions and took advantage of a
boom in athleisurewear.
However, the outspoken Lancastrian
had been accused of scoring a series of
own goals recently that had frustrated
the Rubin family, which owns 55 per
cent of JD via Pentland Group.
The company had been reviewing its
governance to soothe City concerns
over Cowgill’s role as executive chair-
man, and it had been expected that he
would remain as chairman after a simpleseparation of roles. But the abrupt na-
ture of the departure caught the markets
by surprise and the shares closed 3½p
lower at 115¾p, a fall of 3 per cent.
His surprise exit followed a board
meeting yesterday where sources said
he was asked to step down with imme-
diate effect. Helen Ashton, senior inde-
pendent director who has been named
interim chairwoman, said: “As our busi-
ness has become bigger and more com-
plex, what is clear is that our internal in-
frastructure, governance and controls
have not developed at the same pace.”
A spokesman for Pentland said that
while Cowgill had “delivered an unprec-
edented period of success... with such
growth comes responsibility. These are
necessary steps to ensure the long-term
sustainable growth of the business and
that JD embraces the scrutiny and re-
sponsibility which comes with being a
FTSE 100 company.”Sources claimed his departure was
probably linked to recent inquiries by
the Competition & Markets Authority
into the price fixing of football shirts.
The company was also hit by a £4.3 mil-
lion fine after it ruled that Cowgill, 69,
had breached rules by meeting the boss
of Footasylum in a car park and sharing
commercially sensitive information.
Cowgill has been at loggerheads with
the CMA over its two-year investi-
gation into a £90 million deal with
Footasylum and accused the regulator
of being misleading and failing to
understand the market.
A spokesman for JD Sports declined
to comment, while Cowgill could not be
reached for comment.
JD Sports, which has more than
3,300 shops in 29 countries, was found-
ed in 1981 by John Wardle and David
Makin. The pair sold their stakes in
2005 and went on to set up Footasylum.Animal magic The pandemic boom in pet ownership has prompted Pets at Home’s outgoing boss, Peter Pritchard, to boast
the business is in “great shape” to grow profits further this year, despite the challenging backdrop of the cost of living crisis