Market Update

As we approach the end of the year and this being my last commentary for 2021 I have been thinking back over the last 12 months...

Posted: 8th December 2021   |   Share

By Sarah Ryman

Sarah Ryman News

2021 saw the broad rollout of vaccination programmes, and the return of culture, hospitality, festivals and nightlife as people tried to enjoy the ‘new normal’ and savour long overdue catch-ups with loved ones. Emma Raducanu inspired us all when she became the first British woman to win a Grand Slam singles title since Virginia Wade in 1977 and the first qualifier (male or female) to ever win this title.  Rachael Blackmore became the first female jockey to win the Grand National. There is newfound hope for the largest living structure in the world as corals, grown using IVF, have spawned for the first time on Australia’s Great Barrier Reef, which has raised hopes of saving this remarkable wonder of the natural world.

2021 has also been a year of testing, lockdowns, travel restrictions, lower for longer rate strategies, supply chain challenges and rising inflation which have resulted in central banks across the globe trying to support economic growth and sustain momentum as the global pandemic still takes its toll.  Alongside the focus to align goals to manage climate change and vaccinate the world, where does it leave us and what will 2022 hold?

It seems unlikely that the challenges we are facing now are going to vanish overnight as energy prices continue to rise and Omicron threatens to intensify imbalances that are slowing growth and boosting inflation globally. 



The market expects the Bank of England to start raising interest rates in February 2022, given there is no meeting scheduled for January and historically the central bank is less inclined to hike just before Christmas – with only a 37% probability of a hike being forecast in December. But will the new variant impact the decision-making process?



Inflation in Germany has surged to 6%, its highest level since 1992 – the European Central Bank will likely also delay making decisions on their post-pandemic bond purchases until February, as they too look to manage rising inflationary pressures and Omicron. 



Federal Reserve chair Jay Powell has signalled his support for a faster ‘taper’ to manage inflation.  “The economy is very strong and inflationary pressures are high,” he said. “It is therefore appropriate in my view to consider wrapping up the taper of our asset purchases...perhaps a few months sooner.”  Probability of a hike is now being priced in for mid 2022.” 

I very much look forward to 2022 and all it holds as we continue to navigate uncharted waters together.

Wishing you and your loved ones a happy and healthy festive period.





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