Whether central banks have done enough to rein in inflation is key to the narrative for the
economy going forward. However, this remains to be seen, says Michael Rosborough, a portfolio manager – global multi-sector at AllianceBernstein. He told its ‘Global Outlook 2023: Setting The Cyclical Backdrop’ that financial markets are already pricing in interest rate cuts in North America for the second half of 2023 and potentially for the UK and Europe by year end. However, this is too aggressive, he said, and central banks will err on the side of caution and need to see demonstrably weaker labour markets to ensure inflation is on a sustainably lower path. Asset markets should begin to perform better once it is clear that a low growth, lower inflation outlook is unfolding.