are rates likely to be paused in 2023?

Introduction

Global equity markets fell over December 2022 as global banks continued to increase rates, stoking fears of the global economy falling into a recession. The U.S. Federal Reserve Board (“Fed”), Bank of Canada (“BoC”), Bank of England (“BoE”) and European Central Bank (“ECB”) all raised rates at their final meetings of 2022 in December. The Bank of Japan’s (“BoJ”) policy adjustments suggested it, too, might be keen to start lifting rates. Inflation eased but remained at worrisome levels, while key business activity indicators in U.S. and China showed a slowdown in economic activity.

In Canada, the S&P/TSX Composite Index finished lower, hindered by weakness in the Health Care and Information Technology sectors. In the U.S., the S&P 500 Index also declined, as did the tech-heavy NASDAQ Composite Index. Gold prices moved higher, partly due to rising economic uncertainty. The price of oil finished largely unchanged, as investors considered the price cap on Russian oil, lower supply from OPEC+, and the potential for lower demand if economic conditions weaken. Yields on 10-year government bonds in Canada and the U.S. moved higher over the month.

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