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Our view of investment markets and the economy•Uncertainty around new variants may delay interestrate hikes although the Bank of England was firstoff the blocks with a rise of 0.15 percentagepoints, to 0.25%, at its December meeting.•Meanwhile, the US Federal Reserve’s ‘dot plot’chart now shows three hikes expected in 2022and another five in 2023 and 2024, as policyshifts back towards a ‘neutral’ 2.1% rate.•We feel that while talk about hikes and taperingmight be concerning in the short term, they areultimately a positive signal on the global economyreaching escape velocity from the pandemic.Uncertainty around new variants maydelay interest rate hikes although theBank of England was first off the blockswith a rise of 0.15 percentage points•It is also important to recognise this tightening cyclebegins at historically low levels, with emergencyrates rather than the lower end of a normal range.•While headline inflation globally has risen sharplydue to higher energy prices and temporarylockdown-driven supply shortages, the increasein core inflation has been less pronounced. Weexpect levels to fall as 2022 progresses.•There remains a split between bulls and bears withrespect to economic outlook so we prefer to take abalanced, flexible approach where we can focuson long-term themes and build diversified portfoliosable to perform throughout the cycle.While headline inflation globally hasrisen sharply due to higher energy pricesand temporary lockdown-driven supplyshortages, we expect levels to fall as2022 progresses4 - Liontrust Multi-Asset Portfolio Services Quarterly Report: Q4 2021There remains a split between bullsand bears with respect to economicoutlook so we prefer to take a balanced,flexible approach where we can focuson long-term themes
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