Daily Alert – Wednesday 15th December 2021: UK inflation hits 5.1 percent

Mark NugentDaily Alert, Dec 2021

Daily Alert – Wednesday 15th December 2021: UK inflation hits 5.1 percent

Good morning.

Reported at 7am this morning, UK inflation hit 5.1 percent year-on-year in November against an expectation of 4.7 percent. The GBP rose. The Bank of England’s mandate is to keep inflation at 2 percent, but it is far from clear how an interest rate hike can fix a global supply chain problem. We will see what Governor Bailey has to say tomorrow.

Yesterday saw more indecisive risk sentiment, with equities broadly down around the globe. This morning shows that the equity slide appears to have stopped and the Japan225 is making a move upwards. I will keep a close eye on that.

Tonight, we have the first of four central banks with the Fed announcing their interest rate decision. Despite the recently more hawkish Fed, there is no expectation of a rate hike before 2022. The accompanying statement will be sieved for signs of the Fed’s thinking. Hawkishness will lead to a rising USD and falling equities. Dovishness will have the opposite effect.

We’ll be back tomorrow.

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