balanced fund quarterly report
March 31, 2022
Economic Commentary
As restrictions were gradually eased in many parts of the world, a corresponding pick-up in the number of people who contracted the COVID virus has occurred. It is becoming more difficult to track the number of actual cases as testing programs have almost been eliminated. The underlying belief is that everyone will eventually contract the virus, with the hope that the additional cases will not put a strain on the health care system. Barring any major setback, there should be a pick-up in economic growth as restrictions are lifted and many businesses and consumers return to a somewhat normal pace of activity.
Inflation remains the key driver impacting financial markets. Inflationary pressures have been more persistent and have increased beyond levels that were previously anticipated by global policy makers. The inflation rate in the U.S. is 7.9%, the highest level in forty years, while in Canada it is 5.7%, the highest level since 1991. The inflation rate in Europe has also increased and is now 7.5%. Expectations are for inflation to continue to move higher before receding by the end of the year. Surging costs for gas, food and housing are propelling prices higher and tight labour markets are contributing to underlying wage increases. In addition, on-going supply chain bottlenecks, which have been amplified as a result of the Ukrainian conflict, continue to add to inflationary pressures.
