As 2021 is about to be left behind, we have been experiencing extremely hectic days since mid-December, especially with the interest rate decisions and monetary policies from the central banks.
After the outbreak of the Covid-19 epidemic in 2020, we welcomed 2021 with great positive expectations. Unfortunately, throughout this year, both the global economies and the domestic economic outlook did not have a very positive course. Increasing energy, food and agricultural commodity prices, unsolved problems in supply chains, transportation costs, high inflation rates and the accompanying unpredictability when we add up the problems in the supply of raw materials affected the whole world in 2021.
In these days when we are about to enter 2022, when we look at the next period, we can say that the inflationary environment will continue. However, there is an important detail. While central banks revised their projections for 2022 in September upwards in December, they expect the inflation in 2022 to remain below that of 2021. While sharing these expectations, they do not hesitate to add that the risks still continue. At this point, we see how difficult the predictability situation is even for the year 2022 and that the central banks still do not ignore the cautious statements by talking about risks while making their forecasts.
If we look at the discourses on the side of the central banks under the leadership of the Fed; After the meeting on December 15, Jerome Powell’s statements were that the risks arising from inflation would continue. In the December projections announced after the meeting, we saw that the inflation forecast for 2022, which was 2 percent in September, was revised upwards to 2.6 percent.
After the explanations made at the meeting, we expect an increase when the interest rate decisions are announced, probably on May 4 at the earliest and June 15 at the latest. When we look at the Euro Zone, where the highest inflation has been seen in the last 25 years, we see that the European Central Bank (ECB) has also announced that it will complete its asset purchase programs by the end of the first quarter of 2022, while it is in parallel with the same Fed.
Contrary to expectations, the Bank of England increased the policy rate from 0.10 to 0.25, while increasing the interest rate early compared to other developed country central banks. This decision of the Bank of England, which expected the inflation in the UK, which saw the peak of 10 years, to rise in 2022, came as a surprise. While the Bank of Japan has not changed the negative interest rate since January 2016, it has announced that it has decided to reduce its bond purchases like the Fed and the ECB.
When we gather; The outlook for 2022 is as follows; The inflationary environment will continue to exist and almost all other central banks, led by developed countries, will follow a tightened monetary policy throughout the next year.
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