📈Bank of England raises interest rates again

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18th March 2022

Bite-sized business news from the UK and beyond

Good morning Bernard Arnault, the 73-year-old billionaire boss of Luis Vuitton owner LVMH, raised the company’s CEO age limit to 80 from 70 so that he can stay in charge for longer. The move appears to be teeing up a “Succession”-like showdown among his five kids.

Today's stories

Going up: Bank of England raises interest rates again
Rocketing valuation: Speedy grocery app Getir becomes a ‘decacorn’

ECONOMY
Bank of England raises interest rates again

What’s going on?
The Bank of England has hiked interest rates by 0.25% for the third time since December in an effort to cool inflation rates that have already ballooned past their target rate.

Why is this important?

With UK inflation at a 30-year-high of 5.5%, it came as no surprise that the Bank of England decided to raise interest rates to 0.75% - back to their pre-Covid level.

The war in Ukraine has spooked energy and commodity markets, sending prices higher which will feed into wider consumer prices. Because of this economists predict that inflation could reach 10% in the coming months.

To get inflation to the target rate of 2%, the cost of borrowing may need to rise further. Raising interest rates can keep a lid on consumer prices but may hamper economic growth.

For that reason, the Bank took a fairly relaxed stance to future rate rises appearing to be more concerned about the effect of the war in Ukraine on economic growth than on inflation.

Other central banks are also facing similar dilemmas. Earlier this week, the US Federal Reserve raised interest rates for the first time since 2018 and pencilled in multiple hikes for the rest of the year.

Zooming out

Who would want to be a central banker in 2022? Spiralling inflation driven by higher energy costs, fragile economies coming out of a pandemic and the geopolitical uncertainty of a war in Ukraine.

If interest rates are too low, then soaring inflation could become hard to shift and would erode consumer spending power. If borrowing costs are too high, then economic growth could grind to a halt.

The Bank of England and its counterparts across the world, will be walking a tightrope in the months ahead.

Other stories to keep you in the loop

Ukraine pain: OECD warns Ukraine war to push prices even higher
Overboard: P&O Ferries sacks all 800 crew members across entire fleet
No sharing: Netflix tests charges for sharing passwords between households
Soaring costs: Ocado puts up prices as costs soar and warns Ukraine war adding to inflation worries
Back to the movies: Cineworld pins hope on more blockbusters in 2022 as debt pile grows
Bad delivery: Deliveroo losses widen with warnings of future cost pressures
Metal chaos: Nickel trading suspended, again
On track: Trainline ticket sales better than expected despite the Omicron variant

DELIVERY
Speedy grocery app Getir becomes a ‘decacorn’

Yesterday grocery delivery app Getir announced it had raised $768m taking its valuation to $11.8bn, making it one of Europe’s few ‘decacorns’ - a private, venture-backed company worth more than $10bn.

Founded in 2015, the Turkish startup operates in nine countries and 81 cities across the UK, US and Europe. The app has been downloaded almost 40m times and promises to deliver popular shopping items in as little as 10 minutes.

The company has been operating in the UK since last year and has expanded quickly, spreading to nine cities and buying rival Weezy in November.

Getir has now raised closed to $2bn and plans to use the latest funds to cement its position as the leader in this industry.

The market for quick grocery delivery has ballooned since the start of the pandemic. Numerous shopping apps have popped up almost overnight including Gorillas, Zapp and Jiffy alongside takeaway apps like Ubereats and Deliveroo. Tesco, Morrisons and Asda have all have teamed up with startups to deliver shopping in under half an hour.

To deliver goods so quickly, these firms rely on hundreds of dark stores – small fulfilment centres based in local neighbourhoods. That’s why they require huge amounts of funding.

Analysts estimate the global grocery delivery market is worth a whopping $10tr so it’s no surprise the market is so crowded. But many of these startups are loss making so it’s likely that smaller, regional players will be bought up by larger, better funded rivals.

Stat of the day

Around a third of adults have a mortgage, another third rent their home and the final third have either never had a mortgage or have paid it off

Interesting links from around the web

How this 26-year-old turned her side hustle into a $170,000-per-year business
Why workers and employers are ghosting each other
Where to watch Servant of the People, the comedy starring Ukrainian President Volodymyr Zelensky

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📈Bank of England raises interest rates again

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