Standard Chartered Bank has projected that more central banks across the globe will likely ease monetary policy settings in 2024 as they battle economic headwinds.
The Global Chief Investment Officer at Standard Chartered Bank’s Wealth Management unit, Mr. Steve Brice stated at the presentation of the Bank’s Global Market Outlook 2024 tagged ‘Sailing with the Wind’ in Lagos.
He noted that Central banks will be aware that lower inflation means higher real interest rates, tightening monetary conditions.
Brice added that slower growth is likely to give the Fed the cloud cover to ease policy, with other central banks to follow suit.
According to Brice, 2023 was the story of goods prices decelerating. 2024 is likely to see service sector inflation decelerate, with shelter inflation potentially even moving into deflationary territory later in the year.
Brice noted that the company’s analysis shows that when inflation is high, bonds and equities are normally positively correlated.
This according to him makes sense as high inflation means central banks cannot worry too much about growth.
Brice said that slower economic growth, lower inflation, and interest rate cuts are likely to lead to lower bond yields.
Brice noted that reduced concerns over a hard landing, alongside expectations that monetary policy settings are going to be eased, means the equity rally has further to extend.
This according to him should be further supported by the fact that earnings are likely to recover in 2024 after stagnating last year.
He advised investors not to have all their eggs in one basket, despite how convinced they are about the outlook.
Brice noted that from the company’s perspective, the most likely risk is a downside growth surprise.
