15 December 2022 - Headline inflation falls to 10.7%

The Bank of England’s Monetary Policy Committee will conclude its final meeting of the year later this morning, having raised short-term interest rates at every meeting in a year that has seen inflation continue to rise to a level that has not been seen in a generation. The Economy has been hit with a perfect storm of factors that have often been out of the control of the Central Bank, but history will decide if the actions that have been taken have been sufficient. The exponential increase in the wholesale price of gas, the war in Ukraine and shortages of several basic foodstuffs have seen inflation test the mettle of the committee members, some of whom, in spite of raging inflation, have shown misplaced concern about the effect of higher rates on economic growth. The replacement of arch inflation-hawk Michael Saunders with the clearly more dovish Swati Dhingra, has changed the market’s perception of the seriousness of the Committee’s inflation fighting credentials. In the two meetings that have been held that she has participated in, she has voted for a hike in rates that is lower than what has finally been agreed. Beyond Currency Market Commentary: Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.