Equities still best for riding the tech wave

AFTER the fastest interest rate hike cycle in decades, inflation is coming down without economic growth coming to a complete halt. Apart from some US regional banks, collateral damage from the interest rate hikes has so far been limited.

Restrictive monetary policy has largely done what it aimed to do: reduce inflation. But the future interest rate path is not yet fully determined – because the prospects for growth and inflation remain uncertain. Among other risks, America’s highly expansive fiscal policy might lead to a second wave of inflation.

Productivity growth offers a potential source of optimism. Artificial intelligence (AI) could help ensure higher margins and lower inflationary pressure. But it seems premature to imagine that AI will have this impact on the whole economy.