Raymond Sia
- Cooler Summer in 2024
Will inflation (finally) starts to “cool” and abate, especially in Developed Markets?
The European Central Bank (“ECB”) has taken the lead in the interest rate cut with a 25bps rate-cut but the jury is still out with regards to the next action by Bank of England (“BOE”) and US Federal Reserves (“Fed”) as their respective economic data has not been compelling or convincing that their economies have inflation under control. In fact, the data from Europe / ECB is not entirely convincing hence their non-committal stance on future interest rate cuts.
Will BOE and Fed start to pivot their interest rates in the coming months?
- Warmer Winter in 2024
How sustainable is the current inflation/economic data?
There is a lot of credibility at stake for central banks to ensure there is utmost confidence in their actions as there is little room for error and optics would look bizarre and silly if there is another pivot with interest rates being adjusted upwards. Memories are still fresh with the Fed’s “transitory comment” on inflation 3 years ago.
Will we see inflation inching-up again before year end; fuelled by everything that is happening globally; from physical wars to economic / cold wars & supply chain and weather disruptions?
3. Goldilocks in 2025
Will we achieve Utopia (Perfect Economy – Not too Hot & Not too Cold) in 2025?
The possibility is certainly there but the probability is not high considering the global economic headwinds. Let’s also not discount the uncertainties that could surface over the next 6 months with both UK and US going to the polls and the direction taken by the newly elected (or re-elected) leaders. Having said this, many are hopeful that a “soft economic landing” can be achieved in many economies with the current high interest rates. The current economic data appears to provide support on this front.
Just like in the story of Goldilocks & the 3 bears, we need to prepare and embrace ourselves for a scenario where; what if Goldilocks got it wrong and the 3 bears were very upset and…….?
Raymond Sia currently serves as the CEO of Canadia Bank and is an experienced speaker & columnist on Banking, Currencies & Foreign Exchange and Leadership.
