The attached note looks at the gradual shift towards the exits from ultra-easy monetary policy by major central banks and the implications for investment markets. The key points are as follows:
The gradual shift of central banks including the Fed and RBA towards an exit from monetary easing has caused some volatility in investment markets.
We continue to expect the first RBA rate hike to be in 2023, albeit there is a risk it could come in late 2022.
However, there are five reasons not to be too concerned: central banks are simply reflecting economic recovery; monetary policy remains easy; shares rose through the last Fed taper; share bull markets usually only end when monetary policy is tight; and it's normal in this phase of the investment cycle for returns to slow.
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