High energy prices will drive further monetary tightening

key takeaways.

• Elevated energy prices are forcing central banks to respond with tighter monetary policy
• We expect a further rate hike from both the Federal Reserve and the European Central Bank this year, as well as a hike by the Bank of England
• We anticipate an additional 75 basis points of rate increases by the Bank of Japan, with a raise now expected in December 2026 and further tightening in 2027, to take the policy rate to 2%
• These limited monetary policy adjustments will not initiate a new rate-hiking cycle, nor do we expect them to derail the economic expansion. We maintain our positive view on risk assets.