BayernLB Research Perspectives - Central banks spring into action

Central banks spring into action

The war ravaging Ukraine and the coronavirus wave sweeping China are hurting growth and price stability. Central banks are now leaning harder against inflation, but the bond market is overshooting.

Perspectives edition 2022/04 (2022/04/27)

Clear & concise

  • The Ukraine war and Chinese lockdowns are weighing on growth and price stability;
  • Uncertainty remains high, especially in the euro area, not far from the war zone;
  • The Fed is poised to tighten the monetary reins sharply during the coming months;
  • The ECB is gradually approaching “interest-rate liftoff“;
  • Asset allocation: Post-overshoot, we are upgrading government bonds to “neutral“.

Video: An espresso with Jürgen Michels


Rarely has the proverb “April showers bring May flowers“ inspired such great hopes as in the present year, right at the top of the list for the longed-for “May Makeover“ being an end to the war in Ukraine, with a subsiding of the new coronavirus wave in China coming a close second. Even though the chances of a fresh start in the wake of the lockdowns shutting down many regions of China are not looking all that bad now that spring is in the wings, it is not only in the short term that a peaceful new dawn for relations between Russia, on the one hand, and Ukraine and the “West,“ on the other, would seem to be utopian.

Unless there are positive caesuras in these developments, of such importance to the global economy, the recent trends - waning growth momentum and growing inflationary pressure - will persist. As a consequence, we have more or less left...

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