Credit Risks on the Rise

The US Federal Reserve hiked interest rates again by 0.75% this week saying it was “”very premature” to think about pausing and that the peak for rates would likely be higher than previously expected” according to Reuters. The UK is expected to raise interest rates by a record amount and the ECB will be looking at its policies too, amongst others. This had the expected knock on effect on currencies as the USD rallied and the GBP fell. It also had an impact on commodity prices as a result of many being priced in USD and also as demand forecasts were revisited and downgraded. Inflation appears to be out of control in some places as it hit 75% in Turkey, for example. All of this of course has an impact on the cost of capital, price volatility in commodities and treasury operations to ensure adequate cash where it is needed. It will also heighten awareness of credit issues and credit risks in general. The recent Risk Technology Trends report, sponsored by Amphora, Commodities People and NASDAQ Risk Platform, commented that, Though credit risk is often referred to a singular capability, it in fact comprises multiple aspects: credit scoring, exposure calculation… continue reading

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