Luc de la Durantaye said the global economic context will change over the coming year. “We’re likely going to go from a policy-assisted recovery that we’ve seen over the past 12 months to more self-sustaining economic expansion,” he said.

Although he said the expansion is expected to continue, investors have more to worry about. Markets fell late last week and again on Monday as fears about inflation gave way to worries about post-Covid economic expansion, although stocks rebounded on Tuesday.

The UK’s much-publicized ‘Freedom Day’ on Monday, marking the end of pandemic restrictions, was overshadowed by the spread of the Delta variant and the quarantine of Prime Minister Boris Johnson.

The bond market has sent alarming signals, with the yield on 10-year US Treasuries as low as 1.14% on Tuesday before rising to 1.21% by day’s end. The 10-year rate briefly exceeded 1.75% in March.

And central banks that are starting to withdraw some of the massive political support from last year “will make a number of market players nervous,” de la Durantaye said.

Adding to the challenge, the pandemic has ‘distorted’ the data central bankers and investors use as benchmarks, he said, and regulatory changes for big tech companies are creating more uncertainty for some of the biggest names. of the market.

“All of this creates an environment in which market participants will be more nervous as we go through this transition, and there will be greater uncertainty,” said de la Durantaye. “This is likely to create more volatility in the financial market.”

Even so, economic expansion is expected to continue, albeit at a decelerating pace, he said. While the Delta variant spreads rapidly, evidence shows that vaccines remain effective, he said, and many developing countries could be 60% to 70% fully vaccinated by fall.

De la Durantaye also highlighted the strong job growth and high savings amounts that will be used as new pandemic restrictions are lifted.

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