The attached note takes a look at the continuing surge in global inflation pressures, notably in the US.
The key points are as follows:
- Inflation is placing increasing pressure on major central banks to remove monetary stimulus.
- The Fed is likely to start raising rates in March and we continue to see the RBA starting rate hikes in November, with the Omicron wave only likely to result in a temporary setback to growth this quarter.
- Inflation & rising interest rates will likely contribute to more volatile & constrained investment returns this year.
- The long-term downtrend in inflation and interest rates since the early 1980s is likely to be over removing a tailwind for investment returns.