Fund watch

What happened in Q4?

Here are some key themes from the fourth quarter of 2022:

US inflation drops to near 7%: After reaching 9.1% in the middle of 2022, annual inflation in the US dropped to 7.1% in November; the fifth consecutive monthly decline and the lowest level of the year. This was largely down to a decline in energy prices.

Fed says inflation fight not over: Although inflation declined, the US Federal Reserve raised interest rates twice and reiterated its commitment to bringing down decades-high levels of inflation. It also released its latest quarterly economic projections, which showed it expects interest rates to peak around 5.25%, while also downgrading its growth forecast and projecting unemployment to rise.

A tumultuous quarter for the UK: It was a volatile quarter in the UK that saw inflation roar to a 40-year high of 11.1% in October. The political situation reached a melting point when Prime Minister Liz Truss tendered her resignation after just 45 days, becoming the shortest-serving British prime minister. Markets later calmed down, following the appointment of her successor, Rishi Sunak.

China abandons its zero-COVID approach: After three years of strict lockdown measures to keep COVID-19 at bay, China’s government announced it would be abandoning its ‘zero-COVID’ policy. While this has led to a widespread pick-up in infections, the decision was seen as being positive, as it should allow the country to return to a position of full capacity sooner, therefore leading to improved economic output and growth.

This article has been prepared by ANZ New Zealand Investments Limited for information purposes only and it should not be treated as financial advice.

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Investment and administration manager: ANZ New Zealand Investments Limited