Concerns around interest rates remaining higher for longer resurfaced and caused a sell-off across most major global markets during September. Interestingly, a year ago (in September 2022), 38 central banks hiked rates. In September 2023, eight banks cut and eight hiked rates, and most did not change policies at all, including Japan, the US and South Africa. The point being that the great post-COVID interest rate hiking cycle, the sharpest and most synchronised ever, is coming to an end. However, this does not mean that a synchronised cutting cycle is imminent.
While inflation has declined from multi-decade highs in most countries, it is too soon to say that inflation is well and truly beaten, particularly in countries where labour markets remain tight, wages are still rising, and household income growth can still support spending. The sharp increase in the global oil price further complicates this scenario, but we are not yet at the point where we should worry about a repeat of the 2022 global inflation surge.
Read more in the latest Prosperity by Private Clients, which gives a monthly market and economic update as well as an overview on recent developments within some of the companies held in our model portfolios.