Hari Balkrishna (left, on screen), David Bell, Angela Ashton and Hugh Giddy

Investment professionals have shared criticism over how central banks have responded to the Covid-19 pandemic, with one arguing there is still more pain to come as a result of the bank’s monetary policy.

Speaking at the Professional Planner Researcher Forum IML senior portfolio manager and head of investment research Hugh Giddy said the next economic cycle will be “tricky” due to past monetary policy from central banks.

“I don’t know how they’ve still got their jobs because they’ve been completely wrong,” Giddy said.

“Phil Lowe has been tasked with getting rid of the inflation he caused by overstimulating the economy. I don’t think I’d have my job if I got things so wrong.”

Lowe recently spoke during government hearings about how inflation grew faster than predicted leading to rate rises earlier than expected.

The current RBA cash rate level is 3.10 per cent which was set on Tuesday, 6 December 2022.

T. Rowe Price global impact equity strategy portfolio manager Hari Balkrishna described inflation as “the elephant in the room”.

“If we want to think about the health of markets going forward, it’s something we’ve got to bring under control as a global society,” Balkrishna said.

A whole new world

Balkrishna noted during the pandemic that because everyone was shut down and opened at roughly the same, the supply side couldn’t keep up with demand.

“Against the backdrop of China continuing to have a zero Covid policy with supply chains not opening up, the supply side hasn’t been able to keep up with the swings in demand at the same time.

“Because of the high-rate environment that demand side is correcting and the supply side is improving.”

Evergreen Consultants founder and director Angela Ashton said financial markets wereentering a “very different world” compared to the recent period of quantitative easing and interest rates will be higher than they were last decade.

“Regardless of exactly how we get there, the important thing is what does that mean for markets and portfolios; I don’t think next year or 2024 looks like a big growth bet again,” Ashton said.