All eyes are on central banks this week.
There were no surprises when the Fed sealed its hawkish “pivot” on inflation yesterday. Government bond purchases are set to end in March, while officials predict they will raise rates three times in 2022.
The ECB also faces a crunch moment when it meets today. The central bank has been more dovish some of its peers, but it is also facing increasing pressure to begin scaling back its huge stimulus programme..
In the UK, news that UK inflation improved economic forecasts – with prices rising by 5.1 per cent in November – was enough to persuade the BoE’s Monetary Policy Committee, which meets today which met today, to raise base rates to 0.25 per cent.
Most economists had expected members to hold fire on a rate rise as the Omicron coronavirus variant sweeps the UK. But earlier this week, the IMF urged BoE officials to increase interest rates, forecasting that UK inflation will “peak at about 5.5 per cent in the spring of 2022”.
Overall, while sudden demand surges during the pandemic have tested capitalist globalisation, the system has passed with flying colours, argues European economics commentator Martin Sandbu. Indeed, “the pandemic’s lesson for global supply chain policy is to leave well alone,” he writes.
But supply chains may face further upheavals as Omicron bites. Experts have warned that the US is “exposed” as it faces up to the variant due to relatively low vaccination rates, inadequate testing and inconsistent mitigation rules such as mask wearing.
Indeed, there were 78,610 coronavirus cases in the UK yesterday – the highest daily total since the start of the pandemic.. Retail, travel, manufacturing and healthcare companies have warned that they face staff shortages as workers call in sick..
And as Omicron sweeps across the UK and Denmark, epidemiologists say the two countries should be an early warning signal for Europe on how infections and hospital admissions could peak, as well as the need for booster programmes.
On to corporate governance, and cyber security has featured in the news this week. Hackers exploited a flaw in a piece of open-source software called Log4J to launch more than 1.2m cyber attacks on companies across the world, researchers said.
Meanwhile, the new British cyber strategy predicted a “clash of values’’ between world powers such as Russia and China. This will “put pressure on the free and open internet”, it warned.
Elsewhere, Unilever veteran Leena Nair has been appointed as the new global chief executive of Chanel. She will assume the role at the end of January.
But as Nair steps up, other executives are stepping back – a trend the TV show Succession has so far missed. “While real billionaires turn their backs to board meetings and the race of managing shareholders’ expectations, so will fictional ones,” writes Fani Papageorgiou.
Yet those who remain in the top jobs face handsome rewards, despite pressure on companies to show restraint. Last year chief executive pay at S&P 500 companies increased by 7 per cent to an average $15.3m, nearly 300 times that of the median worker.
