Monetary Policy and Inflation
The second half of 2023 has been dominated by addressing high inflation. This has seen significant monetary policy tightening across the US, Canada, New Zealand, UK, Europe, and Australia. However, during H1 2023, some of the major central banks, including both the US Federal Reserve and the Reserve Bank of Australia, are expected to end their tightening cycles. Indeed, before the end of 2023, we expect to see the start of a monetary policy easing cycle in both the US and Australia.

Global Economic
Growth Global economic growth is likely to moderate in the second half of 2023, while inflation looks set to cool off. That being said, global core inflation will remain high at above 3% through to 2024. A new round of developed market tightening is most likely anticipated before the end of 2023 in a bid to bring inflation under control.

Impact on Financial Markets
This pivot in monetary policy and the global economic slowdown is expected to have a significant impact on financial markets, with the potential for a strong rally in bond markets and an eventual shift in the strong USD trend. There is also the risk of something ‘breaking’, with recent developments in crypto markets and platforms a good example, while market volatility is likely to remain elevated.