Share Prices & Company Research


31 January 2022

Redmayne Bentley Market Update

Despite last month’s projections by the United States Federal Reserve (Fed) predicting just three interest rate rises this year, Chair of the Fed Jay Powell suggested on Wednesday that the tightening of monetary policy may be even more combative than initially thought. With inflation surpassing its 2% target level and a declining unemployment rate, Powell suggested that the Committee is looking to make its first rise of the federal funds rate at its next meeting in March, provided that the conditions are appropriate. When questioned whether the Fed might raise rates at every meeting after this, Powell avoided giving a direct answer and instead expressed that they will be “humble and nimble” and “guided by the data.”

In addition to rate rises, the Fed also committed to slowly easing its bond-buying programme which had been used to bolster the economy, and completely ending purchases by early March. From the onset of the pandemic, the Fed had pledged to keep the main policy rate at the lowest possible level with the assistance of the bond-buying program to achieve 2% inflation and maximum employment over time. Powell indicated that inflation has now risen above this point, and there has been a fundamental decline in the unemployment rate meaning that the labour market conditions are strong enough to cope with such changes.

Quarter point interest rate rises have become the norm with rates not having been raised by more than 0.25% at any one time. It is unclear, however, whether this will remain the case with Powell declining to comment on the Fed’s plans of raising the interest rate by half a percentage point at some point this year. Investors will be closely watching the Fed’s next steps, with fears rising that the proposed changes will cause stocks to plummet and a rapid slowdown in the economy. However, Powell has provided some reassurance that the economy is much stronger now than during its previous rate rise cycle. Inflation is far higher than what the central bank were tackling in 2015, giving greater necessity to the rate hikes.

Back in June 2021, ‘big four’ UK accounting firm Deloitte told its staff they can work wherever they liked for as many days a week they would like as part of a new approach to flexible working in the wake of the COVID-19 pandemic. As a part of this approach, and as a drive to improve the firm’s culture, Deloitte announced on Wednesday that employees are now entitled to have flexible public holidays in which staff can take off the days that are the most significant to them. With employees coming from a variety of different backgrounds, it is conspicuous that days that are important in the UK are not necessarily of significance to every individual. For many, public holidays that are applicable to other countries or other religious and cultural celebrations will hold greater meaning and an increased desire to take the day off.

Grant Thornton had already announced its introduction of the policy in October. Both firms are aiming to create a diverse and inclusive environment in which each employee feels respected and more able to thrive. This change of culture has also come with a competitive search for talented workers in which companies have been issuing pay rises, flexible working patterns and bonuses. A survey by Deloitte found that of its staff, 80% felt that they were more productive working under a hybrid working model. Allowing staff to work on public holidays and take another day off instead will not only improve the environmental, social and governance (ESG) rating of the company, but it should additionally see an improvement in efficiency, productivity, and employee retention rates.

Please note that this communication is for information only and does not constitute a recommendation to buy or sell the shares of the investments mentioned. The value of investments and any income derived from them may go down as well as up and you could get back less than you invested.
Redmayne Bentley Market Update
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