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Schroders’ economists are forecasting global inflation of 7.2% this year, up from 3.4% in 2021.
The Governing Council (GC) became less hawkish on rate hikes and will lay out future steps on quantitative tightening (QT) in Dec.
The growth recorded for 2023 is therefore likely to be well above or well below the level of zero currently expected. What factors could tip the balance?
After making a strong recovery from the pandemic, Europe’s luxury goods industry must now contend with the challenges brought by much higher than anticipated inflation, particularly around energy prices.
Sticky inflation and an optimistic outlook for the economy sustain the Fed ’s hawkish stance. Rates should peak at 4.75% in Q1 2023, but we expect a first cut by the end of next year.
Global equities have historically provided an effective inflation hedge when US inflation is between 2-6%, but not all of the companies will succeed in this environment.
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