{"id":3713,"date":"2021-12-22T11:33:19","date_gmt":"2021-12-22T11:33:19","guid":{"rendered":"https:\/\/new.contentdeployment.co.uk\/tomd\/2021\/12\/22\/news-in-review-36\/"},"modified":"2022-07-05T14:10:06","modified_gmt":"2022-07-05T13:10:06","slug":"news-in-review-36","status":"publish","type":"post","link":"https:\/\/new.contentdeployment.co.uk\/tomd\/2021\/12\/22\/news-in-review-36\/","title":{"rendered":"News in Review"},"content":{"rendered":"
\n

\u201cWe\u2019re concerned about inflation in the medium term\u201d<\/em><\/strong><\/p>\n<\/div>\n\n

\n

Last\nweek the Bank of England (BoE) became the first major central bank to raise\ninterest rates since the onset of the pandemic. At a meeting ending on 16\nDecember, the Bank\u2019s nine-member Monetary Policy Committee voted by an 8-1\nmajority to raise rates to 0.25%, an increase of 0.15 percentage points.\nSpeaking after announcing the decision, BoE Governor Andrew Bailey said, \u201cWe\u2019re\nconcerned about inflation in the medium term and we\u2019re seeing things now that\ncan threaten that.\u201d<\/em>\u202f<\/strong><\/p>\n<\/div>\n\n

\n

Inflation\nsurges to 10-year high<\/strong><\/p>\n<\/div>\n\n

\n

The rate\nhike came a day after the Office for National Statistics (ONS) revealed\ninflation is now rising at its fastest rate for 10 years. In the 12 months to\nNovember, the cost of living rose by 5.1%, up from 4.2% the previous month and\nabove all forecasts in a Reuters poll of economists. ONS said price pressures\nwere broad based, with the largest upward contributions coming from motor\nfuels, clothing and footwear.<\/p>\n<\/div>\n\n

\n

The BoE\nsaid it now expects inflation to peak at around 6% next April \u2013 three times higher\nthan its target \u2013 before falling back in the second half of next year. The Bank\nalso said that more \u2018modest tightening of monetary policy over the forecast\nperiod is likely to be necessary\u2019<\/em> in order to meet its 2% inflation target.\n<\/p>\n<\/div>\n\n

\n

Fed to cut support more quickly<\/strong><\/p>\n<\/div>\n\n

\n

US Federal Reserve officials also signalled their intent to ratchet up\nthe response to rising inflation. Last Wednesday, following its latest two-day\npolicy meeting, the Fed said it would speed up plans to withdraw support for\nthe economy, suggesting its stimulus programme will end by March. At a news\nconference, Fed Chair Jerome Powell said, \u201cThe economy no longer needs increasing\namounts of policy support.\u201d <\/em>This opens the door\nto interest rate rises next year, with the Fed\u2019s \u2018dot plot\u2019 of policymakers\u2019 forecasts\npointing to three quarter percentage-point hikes by the end of 2022.<\/p>\n<\/div>\n\n

\n

Omicron hits private sector growth<\/strong><\/p>\n<\/div>\n\n

\n

A closely-watched\nsurvey released last Thursday has highlighted the economic impact being wreaked\nby the Omicron variant. The preliminary reading of the IHS Markit\/CIPS Composite Purchasing\nManagers\u2019 Index (PMI) fell to a\n10-month low of 53.2 in December. While any value over 50 still\nrepresents expansion, the latest figure was significantly lower than November\u2019s\nfinal reading of 57.8. IHS Markit Chief Business Economist Chris Williamson\nsaid, \u201cThe flash PMI data show the UK economy being hit once again by\nCOVID-19, with growth slowing sharply at the end of the year led by a steep\ndrop in spending on services by households.\u201d \n<\/em><\/p>\n<\/div>\n\n

\n

Manufacturing activity strengthens<\/strong><\/p>\n<\/div>\n\n

\n

The latest monthly\nCBI Industrial Trends Survey, published on Monday, suggests Omicron has so far\nhad less impact on manufacturers, with manufacturing output growth in the\nquarter to December accelerating at its fastest pace since July. The survey\ndid, however, report a further deterioration in inventory positions and CBI\nDeputy Chief Economist Anna Leach said,\u201d behind the scenes, firms are battling pressures on a number of\nfronts<\/em>\u201d and added, \u201cThe spread of the Omicron variant will have been a\nblow to business confidence.\u201d  <\/em><\/p>\n<\/div>\n\n

\n

Retailer highs and woes  <\/strong><\/p>\n<\/div>\n\n

\n

ONS data released\nlast Friday revealed stronger than expected growth in retail sales last month.\nIn total, sales volumes rose by 1.4% in November, with consumers taking\nadvantage of Black Friday sales to begin their Christmas shopping early. ONS\nsaid that clothing stores, as well as computer, toy and jewellery retailers all\nreported robust sales figures. <\/p>\n<\/div>\n\n

\n

Data from the CBI\u2019s\nlatest Distributive Trades Survey published on Tuesday, however, suggests sales\ngrowth fell sharply in the first half of this month. CBI Principal Economist\nBen Jones commented, \u201cOur December survey confirms what we\u2019ve been hearing\nanecdotally about Omicron\u2019s chilling impact on activity on the High Street,\nwith retail sales growth slowing and expectations for the coming month sharply\ndowngraded.\u201d <\/em><\/p>\n<\/div>\n\n

\n

Chancellor\nannounces business support<\/strong><\/p>\n<\/div>\n\n

\n

Public sector\nfinance statistics, also released on Tuesday, showed government borrowing\nalmost halved in the first eight months of the current fiscal year compared\nwith year earlier levels. The same day, Chancellor Rishi Sunak unveiled a fresh\npackage of support for struggling hospitality and leisure businesses hit by a\ncollapse in bookings due to rising COVID cases.<\/p>\n<\/div>\n\n

\n

Here to help<\/strong><\/p>\n<\/div>\n\n

\n

Financial advice is key, so please do not\nhesitate to get in contact with any questions or concerns you may have.<\/p>\n<\/div>\n\n

\n

The value of investments can go down as well\nas up and you may not get back the full amount you invested. The past is not a\nguide to future performance and past performance may not necessarily be\nrepeated.<\/strong><\/strong><\/p>\n<\/div>","protected":false},"excerpt":{"rendered":"

\u201cWe\u2019re concerned about inflation in the medium term\u201d Last week the Bank of England (BoE) became the first major central bank to raise interest rates since the onset of the pandemic. At a meeting ending on 16 December, the Bank\u2019s nine-member Monetary Policy Committee voted by an 8-1 majority to raise rates to 0.25%, an […]<\/p>\n","protected":false},"author":12,"featured_media":3730,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[32,112],"tags":[],"hd_content_source":[116],"_links":{"self":[{"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/posts\/3713"}],"collection":[{"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/users\/12"}],"replies":[{"embeddable":true,"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/comments?post=3713"}],"version-history":[{"count":1,"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/posts\/3713\/revisions"}],"predecessor-version":[{"id":3731,"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/posts\/3713\/revisions\/3731"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/media\/3730"}],"wp:attachment":[{"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/media?parent=3713"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/categories?post=3713"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/tags?post=3713"},{"taxonomy":"hd_content_source","embeddable":true,"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/hd_content_source?post=3713"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}