Investment Institute
Weekly Market Update

Take Two: US inflation eases, prompting hopes of smaller rate hikes; World Bank cuts growth forecast

  • 16 January 2023 (3 min read)

What do you need to know?

US inflation eased further to 6.5% on an annual basis in December, from 7.1% in November - the slowest annual increase since October 2021. On a monthly basis, the Consumer Price Index (CPI) fell 0.1%, driven by lower gasoline prices, and was the first month-on-month drop since May 2020. Core CPI, which excludes food and energy, was up 0.3% on the month. The news supported hopes the Federal Reserve (Fed) could adopt a less aggressive approach at its February policy meeting, with expectations coalescing around a 25-basis-point hike. One member of the Fed’s rate-setting committee, Patrick Harker, said that this would be an “appropriate” level.

Around the world

Global growth is expected to slow to 1.7% this year and 2.7% next, with the world “perilously close” to falling into recession, according to the World Bank. It downgraded its growth forecast from 3% for 2023 and 2024 due to continued high inflation and interest rates, and the impact of the Ukraine war, and warned that “any new adverse development” could push the global economy into recession. Meanwhile, the World Economic Forum ranked the cost-of-living crisis as the most severe risk to the global economy over the next two years. Climate change remains the biggest long-term risk, it said, as it prepares for its annual meeting in Davos, Switzerland, this week.

Figure in focus: 2.1 billion

Around 2.1 billion trips are expected to be made within China during the Lunar New Year period, after the country reopened its borders to overseas travellers for the first time since March 2020. That represents a 99.5% increase from last year and around 70% of pre-pandemic levels, according to the Chinese government, and marks a crucial step in its retreat from its strict ‘Zero-Covid’ policy. The re-opening of the economy is expected to put upward pressure on prices; last week data showed annual inflation rose to 1.8% in December from 1.6% in November, on the back of rising food prices.

Words of wisdom:

The Montreal Protocol: A global agreement to phase out the manufacture and use of chemicals responsible for the depletion of the ozone layer, such as those used in refrigeration and aerosol production. Signed in 1987, the Protocol was the first treaty to have achieved universal ratification in United Nations (UN) history. Last week, a UN-backed panel of experts confirmed the phase-out of nearly 99% of these ozone-depleting chemicals – putting the ozone layer on track to recover to 1980 values by 2040 if current policies remain in place, though by 2045 in the Arctic and 2066 in the Antarctic.

What’s coming up

On Tuesday China reports fourth quarter GDP numbers and its latest unemployment rate. The Bank of Japan holds its first monetary policy meeting of the year on Wednesday, when the UK and Eurozone also announce updated inflation numbers. On Thursday the Central Bank of Turkey meets to decide on interest rates while the US reports on Housing Starts. Updated inflation data for Japan lands on Friday.

Related Articles

Weekly Market Update

Take Two: Eurozone inflation eases; Labour wins landslide UK election victory

  • by AXA Investment Managers
  • 08 July 2024 (3 min read)
Weekly Market Update

Take Two: US GDP revised up; Canada inflation unexpectedly rises

  • by AXA Investment Managers
  • 01 July 2024 (3 min read)
Weekly Market Update

Take Two: BoE holds interest rates as inflation falls to target; Japan exports rise

  • by AXA Investment Managers
  • 24 June 2024 (3 min read)


    This document is for informational purposes only and does not constitute investment research or financial analysis relating to transactions in financial instruments as per MIF Directive (2014/65/EU), nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalized recommendation to buy or sell securities.

    Due to its simplification, this document is partial and opinions, estimates and forecasts herein are subjective and subject to change without notice. There is no guarantee forecasts made will come to pass. Data, figures, declarations, analysis, predictions and other information in this document is provided based on our state of knowledge at the time of creation of this document. Whilst every care is taken, no representation or warranty (including liability towards third parties), express or implied, is made as to the accuracy, reliability or completeness of the information contained herein. Reliance upon information in this material is at the sole discretion of the recipient. This material does not contain sufficient information to support an investment decision.

    Are you a Professional Investor ?

    This website is available in English only and directed at professional, institutional or qualified investors. It is not suitable for retail investors. As such, some of the funds, products and services described on this website are not available for retail investors under the MiFID II (Directive 2014/65/UE). By pressing accept you confirm that you are a professional investor and agree to AXA Investment Managers' Legal Information and Terms of Use.