According to Monier, inflation has started its descent and the disinflationary trend will continue for the rest of 2023 — but central banks will remain restrictive for a while. He notes that inflation has peaked and is rolling over thanks to falling energy costs, while service inflation remains elevated and related to the strength of labour markets. “Central banks should stop hiking in 1Q2023 but refrain from cutting rates for an extended period of time to weaken employment further,” he says.
2023 is set to be a year of “turning points” according to Swiss private bank Lombard Odier in its 1H2023 global investment and macroeconomic outlook that focuses on Asia and China’s reopening.
The Swiss private bank’s chief investment officer (CIO) Stephane Monier says the global economy will slow down initially in 2023 before recovering further in the year. Disinflation across key regions with diverging slowdown paths will have an impact on growth, but he says the downturn will set the stage for an eventual recovery this year as policy rates reach their peaks.
