Weekly Roundup of Financial World News Jun 14th 2022

BoE to Resist 50-Point Rate Hike

The Bank of England is widely believed to be increasing its base rate by just 25 basis points this week – not 50 – as policy makers weigh up the risk of high inflation against an ambiguous environment in regard to growth.

There is little-to-no doubt that the Bank of England will raise rates in the next few days. Perhaps more significantly though, markets are also anticipating a succession of further rate hikes in the months to come.

US Dollar Still in Demand

In today’s economic landscape, central bankers are generally looking to raise rates quite aggressively, even though growth expectations are declining. Investors now have to question which economies are best equipped to put up with tighter monetary conditions and which currency they should bet on.

The US dollar may be a good candidate. Contrary to European inflation – largely influenced by supply factors – the price rises in America are more dependent on demand. This implies that stagflation in the US could be less likely than in Europe.

Could New WTO Tariffs Be Looming?

The rapid growth of the digital market has seen tariffs exempted from duties for over two decades. However, some countries have now threatened to lift the ban on international digital duties. This is because they want to increase revenues in the global online ecommerce market, which is valued by the UN at nearly $27 trillion.

Failure to renew the E-Commerce Moratorium by the World Trade Organization could lead to new regulatory problems resulting in increased consumer prices for Netflix films, cross-border Amazon.com purchases, Sony PlayStation games and Apple music.