Francine and im Francine Lacqua. Euro area finance ministers convene in brussels today. Greece will be front and center of their discussion. Greece is facing challenges on several fronts, the euro sliding as a debt payment is due tomorrow. Chancellor Angela Merkel faces domestic pressures to give up on greece. Guy Tom Mackenzie is in brussels. Marcus bensasson is in athens. Tom, what will this meeting deliver . Tom you might be thinking, here we go again. Greece faces some very concrete deadlines. That is a 150 million euro payment to the imf tomorrow followed by another one in june and a huge payment to the ecb in july and august. Expectations being dull down because of the tensions between the two sides. Recently the french finance minister coming out, saying that to reach an agreement, we have days or weeks. It follows comments by wolfgang schaeuble, saying, warning that greece could accidentally default. And Jeroen Dijsselbloem saying that greece has not done enough. Great Prime MinisterAlexis Tsipras saying he is going to take a tough line on negotiations and also saying he wants to see some kind of agreement that supports what greece has already done. They need some kind of positivity from this. The ecbs role is crucial. If the ecb doesnt see some kind of progress on these reforms they have been battling over, then the ecb could further restrict access to financing for greek banks. Francine market is, what does greece hope to get from the eurogroup meeting . Do we know anything about tactics . Are they going to be more friendly than they were last time . Marcus well greece is looking for a positive statement. It is worth noting that this is going back compared with previous meetings, including that acrimonious last one in riga. So often, the meetings have been talked about as selfimposed deadlines to be reached. The greeks have been looking for more funding. This time, they are just holding out for recognition of the progress that has been made so far. They are saying an appeal will be closed in may, but we need something from the other side. Over the last week we spoke about the improvement in the process and the tone after that reshuffle. From the creditors side, we have been hearing about this in terms of the process as a difference of substance. There has also been some retracing of red lines. If you look closely at state asset sales, that is a lot less of a redline. Some of the key ones such as pensions and labor reforms, if you look at what aspects of those are crucial on the greek side, you can see things being toned down a little bit. But the greeks need the recognition of that. All guy all the noise ive heard suggests that they are going to make the 750 payment. Is that the story you are hearing in athens . Marcus we think so. We keep on hearing, we never know quite when the money is going to run out, but they do have the money for tomorrow, we understand. We have been hearing the same record for a long time. A month ago, we had the minister , the interior minister saying he would pay wages and pensions. This is indicative of the faction that exists within syriza that does one that choice to be made. The longer it goes without the prospect of agreement, the more strengthened they are within the party. Guy ok, thank you very much indeed. Marcus bensasson and Tom Mackenzie joining us. Francine that brings us to todays twitter question. Should greece default . Tweet us. Guy lets try and get some answers to that weston. The Portfolio Manager of pimco is chuckling. Should it . The only people that can default to it is the institutions. They dont need to default. It depends on how you wanted to find default. In terms of a disruptive default, i dont think theres any francine what do you make of the noise we have heard from the french finance minister . How do you default accidentally . Michael you default accidentally if you run out of time in negotiations. Francine but that is not an accident. Michael it is if you dont intend to. You could argue they run out of time and people are worried about the greek negotiations running out of time. None of us know when they actually run out. We could all speculate. Most of us would speculate that is early next month. If they are going to do something, theyve got to do it in the next few weeks. We dont know that. Theres no guarantee. We know theyve got these payments to the imf and the european institutions, but theyve got pension payments as well. Our expectation is, they can make it through this month, and thats why you are seeing this kind of negotiation. Guy how brave the you think the greeks are and how brave do you think the institutions are . You could engineer a situation on either side where you force somebody into a default but then you have this month leeway. That produces a month in which you have to get it nailed down. That takes quite a lot. Michael i think neither side wants to go down the route of default and exit. You can see that in the greek polls. The greeks dont want that. Guy if you dont have cards to play, you have to engineer some cards to play. Michael it looks like the cards the greeks were playing were to stay as long as they could. I think one would have to look at the shift in personnel on the negotiating team as partially railing back on that. And obviously, the ecb has a lot of cards to play. The ecb has them on a pretty tight leash with the banking system. If the move is going to happen, it has to come from the greeks. Francine how do you play this in the markets . Michael our assessment of where the market is, is about a 30 40 chance of a greek default priced in. We would say on the balance of the moment, we would take the under on that. As we all know, there is that risk. Francine thank you so much mike amey. Guy what else is on our radar . The bank of England Governor Mark carney will reveal the latest Rate Decision today. Market sentiment shifted after the election victory, putting the banks well offset. Francine Chinas Central Bank has cut Interest Rate for the third time in six months as it ratcheted up support for an economy grappling with a debt overhang. The peoples bank of china produced the 1 reduced the oneyear lending rate and cut the oneyour deposit rate. Guy despite chinas faltering growth, a ceo tells bloomberg he has a positive outlook for the worlds secondlargest economy. The key is some very strong fundamentals. You see that china is going to be important going forward. Renewables will be very important. Francine heres what else we have coming up this hour. Next, Prime MinisterDavid Cameron prepares to make the final appointment to his cabinet. Guy at 9 30, we go live to beijing to assess the impact of chinas rate cut. Francine at 9 50, the new piece of russian weaponry. Guy we are talking battle tanks today. Up next, why camerons minuscule majority could cause him a few problems. We have the latest from downing street next. Francine welcome back to the pulse. We are live on bloomberg tv and radio. Guy fridays shock u. K. Election result, the conservative party now has a majority in the house of commons. It be a little problematic for the Prime Minister when it comes to the issue of europe. Anna edwards is at downing street this morning. That slim majority means David Camerons backbenchers, their leverage, a little better now. Anna good morning to you. The subject of europe is going to be key during this parliament. Keeping the backbenchers on site, making sure he can pass the legislation he wants is going to be one of the preoccupations. He has a majority of just 15. That compares to 1992, when the majority was 22 seats under john major. That conservative government was torn apart when he tormented by the subject of europe. Something many in the conservative party might be mindful of. With that in mind, David Cameron has suggested that George Osborne is going to need going to lead some negotiations with europe, to renegotiate the relationship between the u. K. And europe. Greece is very much on the agenda. A migration crisis also on the agenda. Meanwhile, Business Leaders have been speaking out suggesting they want the u. K. To stay inside the eu. The cbi has said they want a campaign for the u. K. To stay in the eu something that perhaps David Cameron will have some sympathy with. A lot of the focus is who is in and who is out. Francine in terms of the cabinet, i guess it is the position that used to be filled by libdems that needs to be refilled. Do we know who will become business secretary . Anna business secretary is still up for grabs. All eyes on the door behind me. We have seen larry the cap making a few entrances and exits. Chris grading also going in. He was just as minister. Now leader of the house of commons. In terms of business secretary position, sajit david has been mentioned for that role speculated about i should say. Matthew hancock has been speculated about. But we dont have any confirmation yet. We know that George Osborne is reappointed as chancellor. Iain duncan smith is back in charge of pensions and welfare. That could be a crucial role given what we know about the conservative plan for cutting back on welfare spending. Look out for some key women to be named as well. David cameron once a third of his cabinet to be female. Guy thank you very much indeed. Anna edwards joining us from downing street. Francine bank of England Governor Mark carney will reveal his latest Rate Decision today. We are joined by bloombergs Jennifer Ryan. It is quite a big week because we are expecting that inflation report. Jennifer think about it. The announcement of the Rate Decision is delayed until today. Policymakers were meeting last week. Amid that uncertainty you could see a really big argument for them not to do anything. On top of that, inflation is still at zero and their target is 2 . Guy jen, talk us about the market moves and how economists are changing their forecast. We got carney speaking later on. Where is the current forecast versus where we thought the bank was . The last two weeks have been incredible in the bond markets. Jennifer it has been rather curious. As soon as the Election Results were announced, markets pushed out there rate expectations to the third quarter. What we are looking at is 18 months of no change in Interest Rates. Theres two things that are interesting. On one hand, it is such a long time when youve got nine quarters of rose, oil prices coming up. On the other hand, youve got carney speaking about the banks new forecast so why not wait until you hear what he has to say . Francine Jennifer Ryan there, our economic correspondent. Guy mike amey still with us. When do you think the next hike is . Michael the headline inflation is not really the deal. I think the issue is the core inflation rate. Core inflation rate is roughly at 1 . It is quite sensitive to prices. With sterling going up theres a debate as to how quickly that feeds through. I suspect it is not all in those numbers. It wouldnt surprise me if the core inflation rate went down. If core inflation goes down, the underlying price still looks benign. Why risk hiking rates until you have not all the ducks lined up which would be core inflation going up and wages going up . I think early would be the middle of next year. The core inflation rate is going to be trending down. Guy is the peak in the cycle increasingly getting the work . Michael the market has been doing that for a while. Our best guess is that the highest they could get the base rate would be 2 , around there. Maybe 2. 5 if you are lucky. The biggest rate cycle postindependence is 175 basis points. Theres two arguments there. If you start at zero, then [indiscernible] the other, is how much spare cash the consumer has got. I think 150, 200 basis points rate cycle is the most you could see. Francine [indiscernible] michael that is a very interesting question. If you look at where it has been so far, there was Research Suggesting that if you tighten regulation, a lot of it in the Service Sector has been where prices have fallen. I suspect that is to do with regulations. We need a more highly regulated Financial Services industry. In the longterm, what youve got to do is create a flexible labor market. Youve got to get Employee Skills up and keep education levels of. Thats not something that happens quickly. What happens is, we probably had too much and now we are getting the payback for that. Francine we will be continuing the conversation with pimco Portfolio Manager mike amey after the break. Guy welcome back. You are watching the pulse. We are still with mike amey. We should talk about china. I want to carry on. We are in a situation at the moment where, picking up on what you said before the break about rates staying low for a long time in the u k and elsewhere, the pension industry is in real trouble. How do we get ourselves out of what is a colossal hole, and how much responsibility should centralbank take . Michael theyve made a bet, which is better to inflate asset prices and get a bigger bang for your buck for the economy as a whole. The winners will from the losers. The winners, basically are corporates and individuals who will borrow more money. The losers are those who need to invest in longterm fixedrate assets, where the yield is 1 . Those are the guys who take the hit. The risk and this is the thing that worries policymakers, is if the deficit is so large, i think the latest numbers are about 350 billion pounds then if profits start to fill holes rather than reinvest in the business, that is a classic environment where you dont get a productivity boost because the money is being diverted. It is not a productive hole. That is a problem. The u. K. Regulator has historically given companies some wiggle room not to relentlessly plug holes but if you are the cfo, you look at that big hole and you wonder. It is a genuine issue for productivity as well as how we get ourselves away from zero. Francine what is your take on china . Do they have the situation under control . Michael we think they have to do more. We dont think this is the last rate cut. They got a 7 target. I dont think any of us expect to be there at the moment. They are trying to counterbalance some weakness in the domestic economy generated by some weak performers of domestic loans. At a point in time where the dollar has been going up if you are linked to the dollar, that is a problem as well. We think theyve got more to do. Guy chinese stocks go up . Michael i think so. Guy all im hearing is evidence that stocks go higher. Michael discount rates are going to stay low. Notwithstanding daytoday volatility guy if you are a pensioner and youve just been freed of holding an annuity again, stocks are looking increasingly like the asset of choice. Michael you are being pushed out of riskfree assets. That looks like the case for a while to come. You also got qe going on. The bank of japan still in fullblown qe. Qe is supportive of risk assets. Francine all right, mike, thank you for coming in. Guy up next, a third rate cut for china in the space of six months. We will ask our beijing bureau chief why the worlds secondlargest economy is stepping on the gas. Francine just a reminder, you can follow us on twitter. We are talking about greece possibly default thing. Should it . Tweet us. Francine welcome back to the pulse. Greece will top the agenda at a meeting of area finance ministers in brussels are in the company need some acknowledgment of progress. The meeting comes a day ahead of a deadline for greece to repay 750 Million Euros to the imf. Guy David Cameron is appointing his new cabinet. Business secretary is still up for grabs. The foreign secretary will lead the renegotiations with terms with the eu. That is expected to dominate the agenda as britain face faces a referendum on staying in the eu. Francine there was a sharp rise on friday after a military crashed over the weekend. Flights were suspended. A spokesman for airbus said test flights will continue until there is clear evidence of mechanical failure. Guy the chinese sec central bank has cut Interest Rates. It coming is grappling with the debt overhang and a slump. In another they are raising limits on what pace can pay favors. Lets go to our beijing bureau chief. Why did they act now . This is the process we have seen them going through . Guest it is the third rate cut since november as you mentioned. What is happened lately is alice he makers have looked they are staring at some depressing numbers. Imports are down. Exports are down. The property sector which accounts for 20 of the economy is sluggish. There are 10 Million Units in oversupply in the property sector. What the government once to do is check cut these rates and give businesses an incentive to borrow money so that they can lend for big projects. Francine have chinese officials done enough to get growth back on track . Guest that is the big question now. What we are seeing is the issue is companies are severely overburdened with debt. Are they going to take this as a chance to go in borrow money and invest in those big projects the government wants them to . It may end up allowing these companies to refinance existing debt at lower rates. It will allow them to squeeze their way through this debt overhang and get back to a situation where they are not feeling the pressure so much. Guy in a sense of how much more needs to be done it, where people talking about . This is an ongoing process. How far through it are we . Guest i think this is certainly not the end. Economists that we have spoken to in the last day or so anticipate another cut in Interest Rates in the third quarter. They have many policy tools at their disposal. China is unlikely to let the