After months of coordinated central bank action to increase interest rates, headline inflation also looked to be slowly improving globally.
Following an upbeat end to 2022, investment markets continued to deliver generally positive returns over the first three months of 2023. In an environment where energy costs were falling globally and the large Chinese economy began to reopen (after their abandonment of strict Covid-19 controls in late 2022), sentiment about the outlook for global growth was very positive.
After months of co-ordinated central bank action to increase interest rates, headline inflation also looked to be slowly improving globally, raising expectations that the global interest rate hiking cycle could soon be coming to an end. Unfortunately, measurements of ‘core’ inflation (i.e. the general cost of goods and services that excludes more volatile food and energy prices) stubbornly stayed higher than expected in both the US and Europe, indicating the interest rate tightening cycle still had further to run.