Issue - meetings

To provide Members with an update on Treasury Management performance and activity to ensure best practice is maintained (report of the Interim Director of Finance (Section 151 Officer) enclosed).

The Interim Treasury Manager (PSPS) introduced the report which included the ‘Treasury Management Update’ at Appendix 1 and detailed the following areas of information:

• Treasury Management Update;
• Economic Update;
• Interest Rate Forecast;
• Annual Investment Strategy;
• Borrowing;
• Debt Rescheduling; and
• Net Treasury Position

Compliance with Treasury and Prudential Indicators for 2025/26 as of June 2025 at Appendix 1A.

Members considered the report and made the following comments:

• Members queried whether the forecasted base rate of 3.5% was realistic given recent economic volatility.
  • The Interim Treasury Manager (PSPS) explained that while economists expected rates to stabilise, global events and persistent inflation made predictions uncertain. A rate of 3% was considered possible but not guaranteed.

• Members asked how often forecasts were updated.

o   The Interim Treasury Manager (PSPS) confirmed that forecasts were reviewed after each Monetary Policy Committee meeting once the minutes were released. Any changes to forecasts would be reflected in the relevant future reports.

• Members queried potential conflicts of interest when lending to East Lindsey District Council, given the partnership arrangement.
  • The Interim Treasury Manager (PSPS) assured members that all lending decisions were made independently, with appropriate professional distance to ensure impartiality and neutrality and were based on market rates without the involvement of broker commissions.

• Members referenced past issues involving Link.
  • The Interim Treasury Manager (PSPS) clarified that the Council’s advisors were Link Asset Services (now known as MUFG) which was a separate entity to Link Fund Solutions which had encountered issues.

·      Members noted the high yield (5.8%) from Monmouthshire County Council and queried the reason for this compared to the lower rates secured.

o   The Interim Treasury Manager (PSPS) responded that the variance was due to supply and demand dynamics, with some authorities offering higher rates toward year-end to secure funding

·      Members welcomed the spread of investments across multiple institutions, noting the importance of avoiding concentration risk.

AGREED:

That the Quarter 1 Treasury Report 2025/26 at Appendix 1 be noted.