Oliver Mangan: More pain in store for stock markets as central banks grapple with decades-high inflation

The Fed needs to move to a neutral policy quickly and a restrictive stance later in the year if inflationary pressures do not abate.

Federal Reserve chairman Jerome Powell says the US economy is in a stronger position now compared to the last tightening cycle in 2018-19, including a far stronger labour market.

It has been a difficult month for equity and bond markets, with considerable volatility in the past week, including some very big intra-day swings.

Investors are wrestling with the competing forces of high inflation, rising interest rates, expectations economies can continue to recover as Covid-19 recedes, as well as ample liquidity in markets, not to mention increased geo-political risks.