Financial markets enjoyed a little reprieve last week following a raft of central bank announcements the week before. Next week sees the focus remain on policymakers, with many set to appear at the ECB Forum on Central Banking in Portugal.
Recessions have gone from being a potential consequence of high inflation and rapid monetary tightening to an increasingly likely scenario. Central banks are pushing back less and less against a period of negative growth, with Fed Chair Powell last week acknowledging it is “certainly a possibility”.
Investors are looking for any indication that inflation has peaked and is on a quick and sustainable path lower, enabling central banks to take the foot off the gas and avert too much damage to the economy. We may have to wait a while longer yet.
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