Spreadex Market Update

UK inflation rise makes interest rate hike unavoidable



UK inflation hit its highest level in almost a decade as the UK CPI rose to 4.2% in October, higher than the expected 3.9%.

This has sent UK markets into a downturn, as the FTSE is currently down 0.47%, even with basic resources and banks outperforming, due to the highly expected interest rate increase from the BoE.

There is a great worry that the recent high inflation rates could be here to stay much longer than was first thought, with global banks, UBS and DBS predicting uncertain times ahead.

These banks seem to think the “uncomfortably high” inflation rates could be around globally, for up to 3 years as it is becoming a lot more structural.

The ECB have stated today that they will be ready to act if inflation becomes more consistent.

Considering the recent news, they have explained how the outlook has become much more uncertain, meaning they could go back on their statement of not putting interests rates up in 2022.

Despite this, European markets have gained today as the DAX and CAC both up 0.09% and 0.12%, respectively.

Even though Target and Lowe’s both posted stronger than expected sales, due to the continued worries about supply-side disruptions and rising input costs both the S&P (-0.15%) and DOW (-0.48%) have both started the day in the red.

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