Sit Tight

Patience, we are told, is a virtue. Central bankers are guided by this old adage, as hasty policy decisions, at times, have produced bad results. While most of the current lot have signaled that the next move will be a cut, the slow retreat of underlying price pressures explains their guarded approach.

This higher-for-longer stance is testing the persistence of consumers and businesses. U.S. economic activity has continued to surprise with its resilience, but the momentum is set to soften in the coming months. On the other side of the Atlantic, European economies are struggling to advance, with outcomes diverging widely. China’s economy remains challenged, while Japan’s presently lacks a driver.

Geopolitics is also top of mind. Further supply disruptions cannot be ruled out, amid ongoing geopolitical tensions, especially in the Middle East. Russia-North Atlantic Treaty Organization relations are garnering more headlines. Policy uncertainty is high in a busy election year.