A number of global events, not least Russia’s invasion of Ukraine, has seen central banks turning their attention to focus on dealing with inflation. Julian Broom, our Chief Investment Officer, looks at recent developments in world markets and shares some thoughts on what we might see next.
Some of the confidence about a post-pandemic recovery, which we saw early this year, has dissolved into investor angst following the unhappy developments in Ukraine. The eventual Russian invasion has only amplified inflation risk in the global economy.
Central bankers are now clearly more concerned about the need to tackle the inflation threat than they have been for two decades. The increases in central bank policy rates put at risk global growth, and in fact we’ve seen economists busy downgrading forecasts for much of the quarter.
Sadly the war in Ukraine has overshadowed positive news on Covid. But it’s worth noting that many parts of the world have significantly eased travel restrictions. Government restrictions on daily life across a number of countries have also improved considerably in some places. And, encouragingly, global travel is up noticeably compared to this time last year. So glimmers of hope remain, and the resulting consumer spending should help support economic development.
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