• Inflationary pressures are now extending well beyond those sectors of the market most closely associated with pandemic-related issues.
  • In response, the expectation for the number of Federal Reserve rate hikes has been rising, with recent consensus at seven hikes in 2022.
  • The Russia/Ukraine crisis has added to the uncertainty and market volatility, and the duration and severity of the conflict and resultant sanctions will determine the potential outcomes.
  • For the US, direct linkages through the trade channel remain modest, but rising energy costs will push inflation even higher – an inflationary doom loop.
  • The indirect effects are likely to be more significant: slower growth as confidence wanes and consumers are forced to absorb higher oil and food prices.
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