According to its chief economist, the Bank of England will need to raise interest rates to keep inflation under control.
Huw Pill’s comments seem to support the theory that yesterday’s shock decision to raise the base rate to 0.25pc may have triggered a cycle in which interest rates rises.
Pill stated that he is “uncomfortable” with current inflation, which is at its highest level in a decade. However, he expressed concern about the evidence of persistent price gains due to the tight labour market.
He said that the BoE had moved to “ensure the credibility of our objective” to bring inflation back at the 2pc target.
Oil slides due to omicron threat
Oil prices fell for the first time in three days due to the rapid spread and uncertainty of the omicron version.
After rising 2.3pc in the previous two sessions, West Texas Intermediate fell 1.4pc below $72 per barrel. Brent crude fell 1.5pc.
Traders are assessing signs that Covid’s new variant and travel restrictions will reduce demand as well as the Bank of England’s decision to increase interest rates in the face of rising inflation.
Big Tech is leading losses as US futures fall
This morning, the Nasdaq was among the stocks that fell most in America. It was due to major tech stocks dropping following the Federal Reserve’s decision not to reduce its pandemic stimulus as quickly as possible.
Pre-market declines were seen in Tesla, Apple and Facebook as well as Amazon, Microsoft, Facebook and Amazon.
The Fed this week signalled three quarter-percentage-point interest rate hikes by the end of 2022 to combat surging inflation, buoying economically sensitive parts of the market but putting pressure on heavyweight tech stocks.
Futures that track the tech-heavy Nasdaq dropped 0.7% S&P 500 fell 0.3pc while Dow Jones lost 0.1%.
