The attached note looks at the gradual shift towards the exits from ultra-easy monetary policy by major central banks and the implications for investment markets.

The key points are as follows:

  • The gradual shift of central banks including the Fed and RBA towards an exit from monetary easing has caused some volatility in investment markets.
  • We continue to expect the first RBA rate hike to be in 2023, albeit there is a risk it could come in late 2022.
  • However, there are five reasons not to be too concerned: central banks are simply reflecting economic recovery; monetary policy remains easy; shares rose through the last Fed taper; share bull markets usually only end when monetary policy is tight; and it’s normal in this phase of the investment cycle for returns to slow

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