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A hawkish pivot

With underlying inflation set to stay uncomfortably high for at least the next six months, we expect most central banks to continue or begin raising interest rates next year. But in some cases, markets may be overestimating the degree to which policy is tightened in 2022. And not every central bank will tighten policy. In China, we think that this month’s cut in the 1-year LPR rate will be a prelude to further easing next year. And President Erdogan has zero appetite for higher interest rates in Turkey.

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