The Main Event
Interest rates will begin rising in 2022. The number and frequency of interest rate increases will likely have a large effect on the economy throughout the year. With economies performing very well, the logical next step is for central banks to begin removing the stimulus that began at the onset of Covid-19, nearly two years ago. Currently, it is expected that interest rates in Canada and the US will increase three to four times throughout 2022. However, with inflation currently at levels not seen since the 1980’s, will this be enough? If the central banks are too far behind the curve, they may be forced to play catch up and raise interest rates faster than currently indicated. The value of the global real estate and stock markets are $300 trillion and $100 trillion, respectively. The pace of interest rate increases will certainly impact these markets.
Covid-19 & Geopolitics
While we are currently in the midst of the Omicron surge, markets expect it to be short-lived. We note that Israel and the UK, two countries with high vaccination rates, have recently announced loosening of travel and other restrictions. While the future is unknown, we hope that Omicron can be the catalyst that helps transition the pandemic to an endemic.
Geopolitical issues remain elevated heading into 2022. A few key issues we will be monitoring include Russia’s actions in Ukraine, the Iranian nuclear talks, and China’s intentions with Taiwan.
Several Important Calendar Events for 2022
- February – Winter Olympics begin in China
- Early 2022 – Elections in Italy and France
- Spring – We expect The Bank of Canada and Federal Reserve to begin raising interest rates
- June – Election in Ontario
- November – US Midterm elections. All 435 members in The House of Representatives will be competing for a new two-year term and 34 of the 100 Senate seats are up for election
Beyond Investing
Many of our clients have benefited from our ‘Beyond Investing’ services, including Financial Planning, Will & Estate Planning, Insurance Solutions, and Charitable Giving. If you are interested in discussing these services, please reach out to book a meeting with one of our team members.
Wishing everyone a happy and healthy 2022.
Pearlstein Wealth
