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Story of the Week – Bank of England could be the first central bank to raise interest rates

It has been a long time since the debate for whether to tighten or loosen the economy began. But, we believe it’s almost time we could expect the Bank of England to increase the rates.

Earlier this month, contrary to expectations, BOE continued to keep the interest rates low at 0.1%.

But, the recent inflation and employment reports are the major factors that could drive the change in BOE’s current standing. This week’s inflation data reflect that inflation reached 4.2% – 10 years high – vs 3.1% in September. 

Bank of england

Inflation is a major concern for both government and investors. Inflation drives one of the key factors in deciding company valuation and any change vs expectation drives major concern among investors.

On the flip side, rising inflation is driven by an increase in prices – a major concern for the current governments. We hope BOE increases the rate soon and sets an example before global economies enter long-term deflation.

Global Market Update – 

Global Equity Market

S&P 500 experienced a relatively volatile week owing to a floating debate about inflation and the signing of the infrastructure bill from Biden. 

S&P 500

Global Gold Prices

Owing to rising inflation concerns, we see a 5% rally in the gold prices this month.

News and Companies in Focus – 

  1. Paytm goes public but the market reaction raises big concerns over the upcoming IPOs. Additionally, SEBI is expected to interrogate investment bankers who led this IPO to test the causality of this fiasco.
  2. There is growing anticipation that UK regulators will investigate Nvidia’s (Nasdaq: NVDA) planned purchase of ARM for £30 billion.
  3. A new milestone has been reached in quantum computing thanks to IBM’s “Eagle” processor.
  4. A self-repair service is coming to iPhones from Apple.
  5. Advertisers will soon have more control over what appears next to their ads on Facebook.

Thanks for Reading!

Shubham Agarwal (CFA L2 Candidate | MBA candidate at University of Cambridge, UK)

Want to discuss this further or have questions regarding finance/strategy? Feel free to connect here – https://www.linkedin.com/in/shubhamagarwal13/

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