As evident in the latest global PMI surveys, economic activity continued to gather momentum at the start of Q2, despite financial market uncertainty. However, headwinds appear to be building. Credit conditions tightened further in the period covering the onset of the banking sector turmoil and loan demand weakened further, while core inflation remained sticky.
Banking sector stress has made several major central banks more cautious, and though they left the door open to further tightening, if conditions warrant, they signaled that a pause may be in sight, or the hiking cycle may have come closer to its end.
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