Central Banks' Missteps Lead to Market Turmoil as Investors Bet Prematurely on Rate Cuts
• Central banks have lost credibility by underestimating staying power of inflation and failing to anticipate resilient labor markets.
• Unclear guidance from central banks about policy outlook has caused extreme volatility in asset prices.
• Investors expect rate cuts in 2023 despite central banks insisting it's too early to declare victory on inflation.
• Such unwarranted moves in markets have severe consequences, especially for rate-sensitive sectors like property.
• Investors betting on rate cuts should consider core inflation still too high, pause ≠ impending cut, cuts more likely in recession.