Thursday 16th December 2021 - 13:27 (GMT)
First it was the US Federal Reserve, who stated that it will speed up its pandemic support tapering whilst also increasing its base interest rates at least three times over 2022. Then, it was the Bank of England whose monetary policy committee voted 8-1 in favour to increase its base rate from 0.1% to 0.25%. And finally, the European Central Bank announced it would hold interest rates at current levels but continue to monitor the unfolding omicron and inflation rate rises closely.
The measures are a clear signal that central bankers no longer view rising inflation as a “transitory” nuisance caused by supply chain problems meeting pent-up consumer demand, but an issue that now requires firm management to avert lasting damage the global economy.
Some analysts believe more efforts should now be made by governments to tackle spiralling producer prices, such as reducing red tape when moving materials cross-border. With unemployment also falling lower within the US, UK and EU, many also believe the tapering of recent pandemic support should be drastically sped-up.
The moves sparked volatility on both equity and currency markets, with GBP moving 3.5% versus the US dollar over the last 24 hours. Figures also showed that $893 billion has been invested into global equities this year, more than the last 19 years combined.
All this points to further unpredictability on currency markets over 2022. Looking into an appropriate purchasing strategy ahead of year-end will help remove some of the growing uncertainty and also protect your businesses bottom line.
