Markets risk underpricing the scale of rate hikes, analysts say - Semafor

Markets risk underpricing the scale of monetary tightening, analysts argued, as central banks around the world adjust to a worsening inflation outlook.

The world is entering a “globally synchronised rate hiking cycle,” Deutsche Bank analysts wrote, and “recent trends in commodity prices will push inflation higher still.” Perceived as being slow to react during the pandemic, central bankers are more hawkish this time around, suggesting hikes will come faster and more frequently.

Steady economic growth and a booming AI investment cycle, paired with persistent conflict-fueled shocks to global energy supplies and stubborn inflation, point to a “structural transformation of the economy,” an economist told The Associated Press. “The regime change in inflation and interest rates is the outcome.”