- Global economic growth is expected to moderate over the course of the year but remains above trend. Expectations for a moderation in inflation over the year may be stalled by inflationary pressures resulting from the conflict in Ukraine.
- Despite rising geopolitical risk impacting growth, developed market central banks are advancing toward tighter policies, the US Federal Reserve is expected to raise rates in March, the European Central Bank is curbing asset purchases and the Bank of Japan remains on hold. Emerging market central banks may need to raise interest rates to defend currencies against a stronger US dollar and to contain inflation.
- Short-term rates are biased higher with central banks tightening, while long-term rates balance concerns of slowing growth, the trajectory of inflation and risk-off sentiment.
- Key risks to global markets include the conflict in Ukraine, accelerating inflation off already high levels, central bank missteps, emergence of COVID‑19 variants and China's growth trajectory.
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