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Central banks are split between acting to reduce inflationary pressure or waiting for the more transitory aspects of inflation to fall back unaided. In the first case, they risk jeopardising growth. In the second, low income families could see their purchasing power decline.

Inflation is now a major concern for central bankers, consumers and investors.

The Edmond de Rothschild Group was recognised in the « Best Family Office offering » category at the ninth Swiss edition of the WealthBriefing Awards.

Trading was dominated by central bank news and particularly the ECB’s drastic shift in tone. The ECB chair Christine Lagarde refused to rule out a rate increase in 2022 due to inflation looking less and less “transient”.

The environment is marked by ongoing tensions on real interest rates, particularly in the United States, triggered by a toughening of the Federal Reserve’s message, as well as the announcement of a probable implementation of a quantitative tightening policy this year (reduction of the central bank's balance sheet).

Equity market volatility surged on prospects of monetary tightening in the US and Russo-Ukrainian tensions.

Equity market volatility persisted as investors wondered whether the Fed would raise rates by 25bp or 50bp if it acts, as expected in March.

US inflation smashed a new record, rising to 7% over 12 months in December and justifying the Fed’s decision to move towards more restrictive policies.

Marouane Bouchriha will leave Edmond de Rothschild Asset Management at the end of January 2022.

Dr Mathilde Lemoine, Chief Economist at the Edmond de Rothschild Group, has published her new growth, inflation and exchange rate forecast for 2022 and 2023.

By Aymeric Gastaldi, Fund manager International Equities at Edmond de Rothschild Asset Management.