Central Banks Continue to Talk Tough – Market Update Week Ending 16th December 2022


Last week the inflation and what central banks are doing about it were the main drivers of the markets. Initially there was some good news because inflation in both the US and the UK dropped more than expected. While still far too high, there is some hope that we’re over the worst. Inflation in goods is easing the most, with some areas, like used cars, seeing deflation. However, labour intensive services, like restaurants and hairdressers, are still putting prices up to cover their increased energy costs and repayments on loans taken out during the pandemic. This has convinced central banks that if they’re going to put inflation to bed then they’re going to need to accept some increase in unemployment.With that in mind, the US Federal Reserve, the Bank of England and the European Central Bank increased interest rates again. They all gave very stern speeches about how it was a long road ahead and not to get carried away about the early signs of slowing inflation. Stock markets took this at face value and fell following the announcement, but the bond markets are much more sceptical and are forecasting rate cuts before the end of 2023.



Falling fuel and energy prices are helping to slow inflation on both sides of the Atlantic. US CPI for November fell to 7.1%, down from 7.7% in October, as a sharp rise in housing costs mostly offset the big drop in energy prices. Core inflation (excluding volatile food and fuel prices) fell slightly but remains around 6% where it has been for much of the year. In the UK, CPI fell very slightly from 11.1% to 10.7% last month, as falling petrol and diesel prices helped offset most of the rise in food costs. Core UK inflation eased slightly to 6.3%, but this remains far higher than the long-term average.Markets have been looking for signs that inflation has peaked and data from other countries including South Africa, India and Germany all showed a reduction in consumer inflation last month. Hopes that inflation may be passing its peak caused global equity markets to rally at the start of the week, as investors assess whether central banks may adopt a more cautious approach to raising interest rates. However, these gains were given back later in the week.


The US Federal Reserve, the Bank of England and the European Central bank all increased interest rates by 0.5% as they continue to tighten monetary policy in response to the highest inflation seen in more than 40 years. This is a reduction for all three central banks, as they all increased rates by 0.75% at their last meetings, but the rate hikes were in line with expectations.With inflation falling and signs that economies are slowing there is speculation that the banks will soon halt their rate hikes. However, central banks are keen to talk up their determination to keep tightening until inflation is firmly under control. US Fed chair Jerome Powell warned that there will be no thought of easing until there is firm evidence that inflation is heading back to target. ECB president Christine Lagarde echoed this sentiment and promised more hikes to come. The hawkish tone caused equities fall. Due to the its weaker economy, UK rates are expected to peak earlier than the US and sterling fell against the dollar.


The UK’s jobs market is showing signs of slowing down. Unemployment has started to rise as the rate ticked up to 3.7%. The number classed as economically inactive decreased as some older workers rejoined the workforce. This may have helped reduce the number of open vacancies, although at nearly 1.2 million these remain near the all-time high. Redundancies dropped sharply under the furlough scheme in 2020 but they have been gradually rising this year, which could indicate corporate weakness. Wages increased 6% in the year to October, but when adjusted for inflation actually fell by 2.7% in real terms.This week we also saw around 50% of hospital nurses join postal workers and railway workers by going out on strike for inflation busting wage demands. The first nursing strike in 100 years adds to the government’s headaches as the country sees the most widespread strikes in several decades. Wages are a key issue for unions as inflation erodes their members’ earnings. Government data shows public sector pay has failed to track the post-Covid recovery seen in the private sector but that’s not to say that the private sector has kept up with inflation either.



New Website

We are delighted to announce the launch of our new upgraded website – www.private-office.co.uk.

If you are looking for expert management of assets, contact us today.

Staff Professional Qualifications

  1. Sebastian has completed his Level 4 CISI Investment Advice Diploma having recently passed his final exam “Financial Planning & Advice”. Sebastian has completed his CPD hours and is currently attending client meetings and completing observed interviews to be passed off as competent in the New Year to obtain his Statement of Professional Standing to become a fully regulated Client Adviser on both investments and financial planning.
  2. Imogen has completed her Training Contract with her previous law firm, and starts the final part of her Postgraduate Diploma in Legal Practice and her Masters in Law (LL.M) at Brabeouf Manor, Guildford, in the New Year, and will be admitted to the Roll of Solicitors of the Supreme Court in the Autumn of next year.  Imogen also commences her first module of her Level 4 CISI Investment Advice Diploma to keep her busy along with her role as our Heads of Marketing and paraplanning assistant


Success at the Expo’s

Imogen put together the logistics for our firm to have a stand at the recent Expos at Brighton Racecourse and the London Excel Centre (2 days). We met lots of firms and individuals with whom we hope to forge some potentially exciting relationships, and there is a short video of us at the London Expo in our new website.  Some photos are also attached here. Our stand was attended by:

*Phil Simmonds-Chief Investment Officer, * Sebastian Simmonds-Investment Director, * Dunstan Harris–Head of Social Media & * Imogen Simmonds – Head of Marketing and Paraplanner.  A good time was had by all, and it was a great success.  Well done team! And thanks to all those who attended our stand.



Please note that nothing written here by the author should be construed as giving advice, it merely outlines our thinking.  Any advice will be discussed and proposed on an individual basis with each client when any advice that is given should be fully discussed with us before proceeding with any proposals made.

If you enjoy reading this weekly update, please feel free to share it with your friends and / or family who may also find the contents of interest, and do not hesitate to contact us if you need any help, information or advice yourself about any of the areas covered this week.

Yours sincerely,


Phil SimmondsPhilip A. Simmonds MBA, LL.B(Hons), FPFS, Chartered MCSI

Chartered Wealth Manager | Chartered Financial Planner

Solicitor (company in-house solicitor)

Chief Investment Officer | Head of Strategy

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