Shifting global expectations

Markets are anticipating less tightening by central banks

A relatively lower inflation reading and the interpretation of a recent statement by US Federal Reserve Chairman Jerome Powell have had market participants believing that the US central banks will not tighten monetary policy to the extent previously anticipated. This has increased risk appetite in global financial markets. Stocks have rallied in most markets and funds have started flowing back into emerging market countries. Mr Powell in his remarks after the July meeting of the Federal Open Market Committee, which decided to increase the policy rate by 75 basis points, said that the Fed will now make decisions meeting-by-meeting and