Performance, May 2022


Rising inflation and rising interest rates are still the major topic in the financial markets. In the US, interest rates firmed at the beginning of the month to its highest level since end-2018. Subsequently, interest rates have adjusted a shade due to less aggressive comments from the Fed. In Europe and Denmark, however, interest-rate hikes continue undauntedly, and similar interest-rate levels date back as far as to 2014. It still seems to be rising raw materials prices which are behind the high inflation levels. Raw materials prices rose even further in May – driven in particular by rising energy prices. The falling growth trend over the past months has, however, resulted in a decrease of the upward pressure on the price of industrial metals.

As is well-known, several large cities in China have been locked down due to outbreak of coronavirus. This has, of course, also had an adverse impact on the Chinese economy. But it also affects the global economy when the second-largest economy in the world is challenged. But the recent number of Covid-19 cases is encouraging, and declining infection rates are reported. This, of course, sends up the likelihood that the Chinese economy will again gain momentum.
The ongoing inflation is a global phenomenon and global central banks are also queuing up to combat it in order to reduce the negative economic consequences. Recent figures show that 73.5% of the world’s central banks have now hiked their interest rates once or several times. This is an extremely high proportion which we have in the past 30 years only experienced three times earlier (see chart 1).

1: Proportion of central banks raising interest rates

Source: NDR research