While many countries discuss the economic recovery and fight against inflation after the pandemic, they keep their warmth on the agenda for interest rate hikes.
“Get Ready for Turbulence”
International Monetary Fund (IMF) financial adviser and capital markets director Tobias Adrian told CNBC that risky assets such as stocks could be sold more, citing the tightening of monetary policies by central banks.
According to Tobias, this turbulence will continue until the end of 2022.
“The reaction of markets to these moves will largely depend on central banks’ ability to explain their intentions and communicate. In this context, it is of great importance that central banks are transparent.
Central banks’ moves to tighten monetary policy and curb rising inflation could push riskier stocks further into the red, even if policymakers promise a smooth transition.
We could certainly see financial conditions tightening further and that means more risky assets like stocks can be sold.”
How Will Cryptocurrencies Be Affected?
Talking about cryptocurrencies, Tobias pointed out the increasing correlation with traditional markets and said that cryptocurrencies will be affected by this turbulence and deterioration.
*Not Investment Advice.