Central banks action will remain the primary driver of market returns globally in 2015, according to the latest outlook from the JP Morgan Asset Management Global Insights team, which also suggests that the pursuit of higher inflation by the banks should encourage investors looking for more equity exposure.
The team’s Worldview: Central banks, the dollar and investing in 2015 report states that the US and UK will experience higher interest rates in contrast to Japan and Europe, where deflation risk still stalks policymakers.
“There are both risks and advantages to this divergence, but, for investors, it will have three implications: a stronger US dollar, continued weakness in global commodity prices and looser monetary conditions globally than previously expected,” said Stephanie Flanders, chief market strategist, UK and Europe.
For example, JPM AM suggests that the target policy rate in Japan will still be 0.07% into December 2017. Even in the eurozone, it does not expect the target rate to hit 0.35% before December 2017.
Click here to read the full report: WorldView-Q4-2014