Investment Markets Commentary to 30 November 2016
The last twelve months were largely characterised by subdued global economic growth and inflation, owing to constrained corporate and consumer sentiment. Most central banks continued to keep policy loose or extend stimulus measures to prolong the economic cycle; though US interest rates were increased modestly at the end of 2015 and are likely to be again in due course, interest rates remain at historically low levels around the world. It seems increasingly likely now that governments in developed economies will complement central bank policy with increased public spending to strengthen economic growth; this has latterly contributed to gains in inflation expectations and bond yields. The diminishing impact of the oil price decline from annualised figures will also begin to have an upward pressure on inflation in the coming months.