But even though stock markets were able to shrug off Omicron, investors can be forgiven for feeling less sure about what’s to come. Increasingly stubborn inflation and record high valuations leave markets entering the new year in a more volatile position than many had hoped. Top of the list for now is what economists call ‘monetary policy’ – or what most of us know as interest rates. By managing baseline interest rates, central banks (including the Bank of England and the U.S. Federal Reserve) effectively decide how easily companies can borrow money. As Garry White, chief investment commentator with wealth management firm Charles Stanley, says, adjusting interest rates needs to be managed carefully.

Source: Daily Mail December 29, 2021 09:13 UTC