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Article28 Mar 2023

Supporting supply chains in a high inflation and climbing interest rate environment

As corporates focused on making their supply chains more resilient to withstand supply chain disruptions, high inflation and climbing interest rates added to the challenges in 2022.

pauline-kontos

Preparing for macroeconomic turbulence means getting back to basics and remaining vigilant with working capital management. Central banks have raised rates to their highest in years in order to combat infationary pressures. As Chairman Powell stated in his August 2022 address, “Restoring price stability will likely require maintaining a restrictive policy stance for some time.1 ” On 8 September, the European Central Bank (ECB) raised its reference interest rates by 75 bps. ECB President Lagarde said, “We expect to raise interest rates further, because infation remains far too high and is likely to stay above our target for an extended period.2 " On the same day, Fed Chair Powell gave a hawkish view saying that the central bank needs to act “forthrightly”, echoing his message delivered in Jackson Hole in late August. And in early November, ofcials announced their fourth consecutive 75 bps interest rate hike, its fourth “jumbo” hike of 2022. And while the pace of hikes is expected to slow, they are expected to continue.

 

 

Article was published in partnership with BCR.

HIGHLIGHTS

 

Today, Citi has many mature Trade and Working Capital solutions  and relationships already in place. By leveraging reliable SCF programmes both buyers and suppliers can build resiliency, access efcient liquidity, and strengthen relationships to navigate and prosper during these turbulent times.

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