Michael Savage: Financial markets have many other concerns beyond inflation

After a global pandemic, wars, double digit inflation, and rate hikes that far exceeded expectations, investors are hoping for more certainty and stability. However, 2024 may disappoint

Markets are watching closely: A divisive and destabilising 2024 US presidential election race would not help.

Financial markets have all but priced in an end to one of the most aggressive rate-hiking cycles by central banks across advanced economics in the last 40 years. Having been almost exclusively focused on the path of inflation, a broader range of questions are now dominating markets in 2024.

The most immediate question facing investors is how high and for how long the major central banks will hold interest rates. The “higher for longer” mantra drove rates to new highs, and markets are now expecting a pivot from the US Federal Reserve, the European Central Bank, and the Bank of England, with easing of monetary policy expected in 2024. The central banks themselves appear less convinced.