Suddenly, as a passenger, she was one of the opportunities of 2022: inflation.

Price increases were no longer an issue on the markets for a very long time – on the contrary.

In between, some observers even worried about the threat of deflation.

At the beginning of 2022, inflation in Germany was more than 4 percent, and everyone rubbed their eyes in amazement.

The inflation target number of "close to but below 2 percent" issued by the ECB had been the yardstick for years, but suddenly the figure reached was significantly higher and the excitement was great.

However, not at the ECB itself. Christine Lagarde, the ECB President, spoke for a long time of a temporary phenomenon.

A mistake, as she herself now admits.

Ten percent inflation

Inken Schoenauer

Editor in business, responsible for the financial market.

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At the end of this eventful year, 2022, inflation in Germany will be just under 10 percent.

The state and companies are financing compensation pacts to mitigate the consequences for citizens, which are particularly noticeable in energy prices.

The central bank is controlling inflation, four interest rate hikes have already taken place, rates are falling slightly, but it will take time.

And what's more, the pace may even have to be slowed down again because the European economy is headed straight for recession.

The antidote would be interest rate cuts.

Then the glory of rate hikes would be over sooner than expected

And now?

There is probably nothing else to do but wait and drink tea.

“The fall in inflation in the USA and Europe and the behavior of the central banks as a result will be decisive for developments in the coming year.

The uncertainty among investors in the year that was coming to an end was mainly based on the observation that the central banks found themselves in a dilemma when they raised interest rates: How should inflation be combated without stalling the economy?” says Ufuk Boydak, portfolio manager and CEO of Investment boutique Loys.

gloomy picture

“The combination of high inflation, rising interest rates and weak growth paints a bleak picture for financial markets.

Stocks are likely to fall further and the dollar could remain elevated or its rally could continue for a while longer,” said Shamik Dhar, chief economist at BNY Mellon Investment Management.

However, policy-related recessions tend to be fairly short-lived and risk-on sentiment is expected to return in the second half of next year.

But there is still a risk that the development will be significantly worse.

"The probability of the S&P 500 falling below 3000 is almost 20 percent," says Dhar.

If the US Federal Reserve succeeds in achieving a soft landing,

but this could possibly be avoided.

“Then a risk-on sentiment should set in, with stocks rising and the dollar weakening.”