The global economy grew strongly in the first quarter of 2023. At the same time, inflation remains too high, which is why central banks will continue to pursue a restrictive monetary policy. Although growth indicators are good to strong, there are therefore increased risks of recession.
Since the banking problems in the US emerged in March, share prices have risen and expectations for future key interest rates have fallen significantly. However, inflation dynamics remain the most important factor for the markets, but unfortunately also one that is difficult to assess.
On the stock markets, the first month of the year was positive. The recent softer tones of the central banks give rise to hopes that interest rate hikes are slowly coming to an end. Read more about the current market assessment in our Investment Update.
At present, indicators on inflation and economic activity are competing to determine which of the two categories is more important for the financial market. Read more in the current market commentary by Chief Economist Gerhard Winzer.
The Inflation Reduction Act is designed to get the US back on track in terms of climate protection. What will the law achieve and who could benefit from it? Senior Research Analyst Stefanie Schock addresses these questions in her article.
Last Wednesday, the countries of the OPEC+ oil alliance decided on a comprehensive reduction in oil production. As early as November, 2 million barrels less per day will be produced. Many countries fear a rise in oil prices.
The central banks want to achieve their long-term inflation target of 2%. In order to achieve this goal, they have raised key interest rates and are implementing a restrictive monetary policy. The higher key interest rates will weaken economic growth and also the labour market. Whether this can be achieved without a recession or whether there will be a “soft landing” is currently the subject of heated debate.
The Inflation Reduction Act recently passed by the US Senate is intended to get the USA back on track in terms of climate protection. By 2030, 369 billion US dollars are to flow into renewable energies through various channels.
Many economic indicators point to weakening economic momentum. Meanwhile, the US labor market continues to be very robust, which recently mitigated the immediate risks of recession in the United States.
In the US, interest rate hikes to a level of 3% by the end of 2023 have become likely. When will the European Central Bank follow? Erste Asset Management Chief Economist Gerhard Winzer analyses the interest rate policies of the central banks.
