top of page

Here's your template to answer inflation related questions in interviews

Updated: Nov 19, 2023

All the students who took our 8 weeks training program, 90% of them found internships and jobs. Please click here https://www.cityinvestmenttraining.com/ to learn more.


Check our popular eBook "Top 100 Investment Banking Questions with Answers".

Click here to get your copy: https://www.cityinvestmenttraining.com/blog


Here's a template to answer inflation related commercial awareness questions in Investment Banking interviews..


Make sure to keep your response in the interview structured and brief.


Know your numbers - i.e. inflation readings, mortgage rates etc.


Here is a model answer that can be refined...


UK inflation more than halved to 4.6% in October from its peak of 11% earlier this year.


Lower inflation is good news for the economy as it generally reflects in lower mortgage rates, higher consumer spending and higher property prices.


However, BOE would need to see a consistent reading of lower inflation, perhaps another 3 to 6 months in the 2 to 4% bracket before they consider bringing down interest rates.


Lower interest rates help sectors such as ..


1. Real Estate

2. Consumer Discretionary

3. Financial Services and

4. Related support businesses such as legal/admin etc.


Re Valuations of equity, lower interest rates allow for higher DCF valuations as cost of debt is lower resulting in a lower WACC being used to discount future earnings.


Especially true for hyper growth stocks in sectors such as Tech.


Overall, we should see a rising stock market coupled with higher M&A deal flow if interest rates reduce significantly over the next year or two.




 

📣 Calling all current undergraduate and master's students as well as recent graduates from across North America and Europe interested to break into investment banking.


City Investment Training is offering a Live Online 2-day course (worth £1,000) for Free.


Spend two days with an ex-Goldman Sachs and Barclays investment banker.


Send your CV to info@cityinvestmenttraining.com with subject "2 Days Course"


🗓 Date: 13th and 14st January 2024



30 views0 comments

Comments


bottom of page