Investors’ expectations and the outlook for DM monetary policy

Although near-term inflationary pressures may prompt most developed market (DM) central banks to bring forward their plans to normalise policy a bit, we continue to think that most will raise rates more gradually than investors currently expect. That said, we still anticipate that long-term bond yields in some DMs will rise further, particularly where we think inflationary pressures will remain elevated over the next few years.