Lord King

Amy Walter

Lord William Hague 

Andrew Morton

Lucy Baldwin is a Managing Director and Global Head of Markets Research and Equity Advisory. Lucy is responsible for managing Citi’s global independent research across all asset classes and for oversight of its global equity advisory business and associated equities client strategy. Lucy sits on the Equities Executive committee. 

Lucy joined Citigroup in April 2021 from Credit Suisse where she was Global Head of Equity Sales and member of the Global Equities Management committee. 

Prior to Credit Suisse Lucy was at Bank of America as Head of European Equity Sales (2015-2019) and at Goldman Sachs as a Director of European Equity Research and in a variety of research analyst roles (2006-2015). Lucy started her career at Cazenove as an equity research analyst covering the building materials sector. Lucy graduated from the University of Birmingham in Economics. 

Lucy is a member of the University of Birmingham Investment Sub-committee and Chairs the advisory board for Ark Curriculum Plus, an educational charity. 



Lucy Baldwin

Jim McCormick

 Lawrence H. Summers

How solid is commercial real estate? It&rsquo;s a timely question given recent news headlines about problems in the sector.
A recent Citi Research report analyzed potential banking system losses due to commercial real estate exposure and found that even if delinquencies rose to 6%, reserves would be sufficient.
This reassuring message comes with the caveat that markets can become destabilized even if fundamental damage stays contained.
Citi&rsquo;s Global Chief Economist Nathan Sheets notes that large money-centers and regional banks have generally charged off CRE-related debt or set aside allowances on loans expected to sour. Small and mid-tier banks are more exposed to CRE, and many haven&rsquo;t been as aggressive in reserving against such exposures. But Nathan notes that their loans tend to have lower risk attributes.
While office buildings in large urban environments are feeling stress, the prospect is less severe for other types of CRE exposures and in other environments.
Nathan&rsquo;s bottom line: CRE delinquency rates are likely to rise over the next several years, with losses gradually accruing, but the likely level of losses is broadly in line with a normal cyclical downturn, and well below losses seen during the Global Financial Crisis. This differs markedly from media headlines that offer up a more dire characterization of the situation and potential damage to the banking system.
Meanwhile Citi&rsquo;s mortgage-backed security strategist Jeffrey Berenbaum notes that banks in the aggregate have reserved $39 billion, or 1.4% of total CRE loan balances, against potential CRE-related losses. Delinquency rates on office and multifamily bank loans are sitting at 1.5% and 0.4%, respectively. That suggests $5.5 billion of losses if a 50% recovery rate is assumed.
U.S. Bank Assets by Bank sizes as of Q4 2023&nbsp;
<img src="/rcs/v1/media/citigpa/akpublic/storage/retrieveMediaFile/65fc41a8ca93067fe39cbbfd">
&copy; 2024 Citigroup Inc. No redistribution without Citigroup&rsquo;s written permission.
Source: SNL, Citi Research
That said, the report says that a disproportionate amount of the allowances for credit loss resides in the larger banks. Smaller banks that tend to have higher CRE concentrations as a percentage of total assets look to be well behind larger peers in recognizing accruals and write-offs. That suggests more headlines are on the way as such institutions deal with problematic loan maturities.
The report suggests defaults will rise as borrowers struggle to refinance maturing loans. Mortgage coupons have jumped to 6.75% or higher, compared with 4.5% on existing loans, and borrowers must fully pay off commercial mortgages in five to 10 years at maturity since they don&rsquo;t fully amortize like residential ones. Office owners, Jeffrey notes, face declining property income in addition to higher mortgage costs as vacancies rise and rents fall, which makes getting a new mortgage that much more difficult.
But that&rsquo;s not the whole picture, he notes: Lower financing costs will mitigate the magnitude of defaults and losses. Expectations for a Fed cut have helped pull down long-term rates, supporting the lending environment, and rallying capital-market spreads are also lowering borrowing costs.
The report also says that non-bank lenders may play a larger role refinancing maturing loans this year, as banks are generally still tightening standards for CRE loans. Nearly 40% of banks reported tighter lending standards in the latest Senior Loan Officer Opinion Survey, though that&rsquo;s down from a recent peak north of 70%. Meanwhile, demand for CRE loans remains soft, with 50% of banks reporting weaker demand. But this metric is also easing, having bottomed at nearly 70% in mid-2023. Loan demand, Berenbaum predicts, will pick up as more borrowers reach out to refinance their maturing loans.
A caution in this multifaceted analysis comes from Citi&rsquo;s global macro strategist Dirk Willer, who notes that markets can become destabilizing even if fundamental damage remains relatively contained. Citi Research&rsquo;s view is that the CRE problem is manageable, a headwind for the banking sector but not a crisis. But bank runs can become self-fulfilling, with a lot of damage done by the time authorities step in&mdash;as the events of March 2023 demonstrate. Willer cautions investors that falling stock prices can lead to deposit outflows, which can send stock prices still lower.
But Dirk also sees mitigating factors at work. First off, the issue of office CRE is well understood: Office REITs peaked in February 2020, recovered substantially after the COVID selloff and then collapsed when interest rates started to rise; currently, we&rsquo;re more than 50% below the 2020 peak. While office REITs have underperformed since early 2021, they&rsquo;ve actually outperformed apartment REITs since mid-2023, with the NYCB shock only leading to underperformance of 5%. He notes that while cheap assets can always get cheaper, it&rsquo;s at least clear that this isn&rsquo;t a new problem but something the market has already priced to a significant extent.
<table style="border-collapse: collapse; width: 217.931%; height: 373.9px; margin-right: 0px; background-color: rgb(255, 255, 255); margin-left: auto; border: 1px solid rgb(255, 255, 255);" border="1"><colgroup><col style="width: 50.9326%;"><col style="width: 49.0587%;"></colgroup>
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<td style="height: 17.9861px; border-color: rgb(255, 255, 255); background-color: rgb(255, 255, 255); border-style: solid;"><span style="color: rgb(15, 22, 50); font-family: Citi-Sans-Text-regular; font-size: 13px; font-weight: bold; text-align: left; white-space: normal; background-color: rgb(255, 255, 255); float: none; display: inline;">&nbsp;Office recently outperformed apartment REITs</td>
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<p class="x-rsch-paragraph CIRCopyright paragraph-with-content" style="box-sizing: border-box; margin: 2pt 0px; color: rgb(15, 22, 50); font-size: 9pt; line-height: 1; font-family: 'Citi Sans Condensed';">&copy; 2024 Citigroup Inc. No redistribution without Citigroup&rsquo;s written permission.
<p class="x-rsch-paragraph CIRCopyright paragraph-with-content" style="box-sizing: border-box; margin: 2pt 0px; color: rgb(15, 22, 50); font-size: 9pt; line-height: 1; font-family: 'Citi Sans Condensed';">Source: Citi Research
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<p class="x-rsch-paragraph CIRCopyright paragraph-with-content" style="box-sizing: border-box; margin: 2pt 0px; color: rgb(15, 22, 50); font-size: 9pt; line-height: 1; font-family: 'Citi Sans Condensed';">&copy; 2024 Citigroup Inc. No redistribution without Citigroup&rsquo;s written permission.
<p class="x-rsch-paragraph CIRCopyright paragraph-with-content" style="box-sizing: border-box; margin: 2pt 0px; color: rgb(15, 22, 50); font-size: 9pt; line-height: 1; font-family: 'Citi Sans Condensed';">Source: Citi Research
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The other reassuring point, he observes, is that equity markets have behaved very differently than they did during March 2023&rsquo;s bank stresses. And fixed-income markets have also seen the NYCB situation as much more benign. The direction of rates suggests the impact hasn&rsquo;t been seen as sufficient to increase the risk of an earlier policy turn from the Fed, and no stress has been observed in money markets. On the credit side, spreads between the largest U.S. banks and the regional banks jumped in March 2023 and have remained elevated, but they didn&rsquo;t jump further with NYCB. This implies the market consensus is that larger banks&rsquo; credit quality hasn&rsquo;t been significantly impacted so far&mdash;and that&rsquo;s another reassuring sign.&nbsp;
&nbsp;
For more information on this subject, if you are a Velocity subscriber, please see the full report here <a href="https://www.citivelocity.com/t/r/eppublic/306wF" target="_blank" rel="noopener" data-link-source="tiny">Global Multi-Asset Strategy - CRE: The Three Trillion Dollar Banking Question</a> (22 Feb)
&nbsp;
Citi Global Insights (CGI) is Citi&rsquo;s premier non-independent thought leadership curation. It is not investment research; however, it may contain thematic content previously expressed in an Independent Research report. For the full CGI disclosure, click <a href="https://ir.citi.com/6A3IURUaezPxFLppsgdBkqidjLaLn558JwHISYaDZcTfE9XMRB1isDDDVorqrxpR%2fTnEi4RUCl8%3d" target="_blank" rel="noopener" data-link-source="tiny">here</a>.

A recent report from Citi Research takes a look at the $3trillion banking question: Do banks &ndash; large and small- provide a sturdy safety net for the ailing commercial real estate sector?

Commercial Real Estate: The Bank Buffer

Citi&rsquo;s Rob Garlick asks Marshall Goldsmith, the world&rsquo;s leading executive coach and award-winning leadership author, about the human skills that will be more important or valuable as Artificial Intelligence continues to advance.
The conversation starts with Marshall explaining why his is giving his new AI-powered coaching bot away to all for free and finishes on the most important lessons Marshall has learnt over his extraordinary career. A link to Marshall&rsquo;s bio and his new coach bot can be found <a href="https://marshallgoldsmith.com/meet-marshall/" target="_blank" rel="noopener" data-link-source="tiny">here</a>.

In conversation with Marshall Goldsmith on humans adapting in the Age of AI

Tougher times lie ahead. While the global economy looks to have registered growth of around 2.7% in 2023, not far from its historical trend of around 3%, Citi Research economists call for a step down to just 2.1% global growth in 2024.
Figure 1. The Evolution of Citi&rsquo;s Growth Forecast 
&nbsp;
<img src="/rcs/v1/media/citigpa/akpublic/storage/retrieveMediaFile/660d6c8f03e2c02f37d37fcd.png" alt="Figure 1. The Evolution of Citi&rsquo;s Growth Forecast "> &nbsp;
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&copy; 2024 Citigroup Inc. No redistribution without Citigroup&rsquo;s written permission. Source: Citi Research
For context, the economy has shown significant resilience in recent years and repeatedly surprised with its ability to absorb shocks while maintaining solid growth amidst substantial headwinds. But looking ahead, most major economies are expected to slow relative to last year, with weakness concentrated in developed markets.
Here&rsquo;s a breakdown of the global outlook:
<ul>
<li>Economies that turned in the weakest performance last year &mdash; Germany, Sweden, and the UK &mdash; are expected to remain weak.</li>
</ul>
<ul>
<li>The largest outperformers last year &mdash; the US, Spain, Mexico, and Brazil &mdash; all look poised to slow.</li>
</ul>
<ul>
<li>China and India are expected to show solid growth though cool a little compared to last year.</li>
</ul>
<ul>
<li>A few emerging markets look set to accelerate, including Korea which should benefit from a bounce back in semiconductor demand as well as Poland and Chile.</li>
</ul>
&nbsp;
Citi Research economists have already marked up 2024 global growth 0.2 pct pts since December of last year as recent data have been a notch better than expected.
Here&rsquo;s a little more detail:
<ul>
<li>US growth is tracking near 1.5% QoQ SAAR in the first quarter by Citi Research&rsquo;s accounting.&nbsp;</li>
</ul>
<ul>
<li>Euro-area growth, meanwhile, still looks set for a weak year, but Citi Research&rsquo;s 2024 forecast increased slightly and has risen for two months in a row.</li>
</ul>
<ul>
<li>The UK, meanwhile, was in a technical recession in the second half of last year but posted an upside surprise with monthly GDP for January.</li>
</ul>
<ul>
<li>Citi Research maintains its forecast for China at 4.6% for this year, but the government has set a more ambitious target of 5%.</li>
</ul>
<ul>
<li>In India, growth surprised strongly late last year and Citi Research&rsquo;s forecast for this calendar year has increased from 5.7% to 6.5% in recent months. &nbsp;</li>
</ul>
&nbsp;
Citi Research economists remain concerned over several lingering challenges, such as the ongoing effects of tight monetary policy and the continued fading in consumers&rsquo; post-pandemic appetite for services. &nbsp;
Central Banks 
Global central banks are now contemplating the start of their easing campaigns. The risks to central banks look increasingly two-sided. On the one hand, inflation may prove more entrenched than expected, particularly given the lack of recent progress on services inflation.
On the other hand, the longer rates stay elevated, the more central banks run the risk of holding policy too tight for too long, which could lead to sharper falls in growth and an undershooting of inflation targets.
With these considerations in mind, we expect central banks to approach policy easing cautiously and with a greater weight placed on the upside risk of sticky inflation.
Geopolitics 
The global outlook to start the year has not been short of risks. For one, geopolitical tensions remain elevated as the war in Ukraine and conflict in the Middle East are still ongoing. By some measures, as highlighted in the figure below, the level of geopolitical stress has subsided significantly since its October spike. This pattern is also consistent with the response of financial markets&mdash;oil prices spiked only temporarily last October as did market volatility. Still, we continue to monitor geopolitical developments closely.
Figure 2. Geopolitical Risks Remain Elevated
<img src="/rcs/v1/media/citigpa/akpublic/storage/retrieveMediaFile/660d6ddb03e2c02f37d37fd9.png" alt="Figure 2. Geopolitical Risks Remain Elevated "> &nbsp;
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&copy; 2024 Citigroup Inc. No redistribution without Citigroup&rsquo;s written permission. Source: Citi Research, Caldara and Iacoviello
The headwinds from fiscal consolidation could also ultimately end up being less than feared given this year is a historic one for global elections.
Governments may delay some of their intended tightening for this year or pass some stimulus measures to win the hearts and minds of voters. The UK, for example, recently announced modest tax cuts.
These elections also pose policy risks that may not move the dial for 2024 growth but will underpin the prospects for the global economy for years to come. For example, the Citi Research analysts expect that these elections will have a pivotal influence on the path of globalization.
For more information on this subject, and if you are a Velocity subscriber, please see the report, originally published on 20 March 2024, here: <a href="https://www.citivelocity.com/t/r/eppublic/32hau" target="_blank" rel="noopener" data-link-source="tiny">Global Economic Outlook &amp; Strategy: Resilience Today, Slowdown Tomorrow?</a>
Citi Global Insights (CGI) is Citi&rsquo;s premier non-independent thought leadership curation. It is not investment research; however, it may contain thematic content previously expressed in an Independent Research report. For the full CGI disclosure, click <a href="https://ir.citi.com/6A3IURUaezPxFLppsgdBkqidjLaLn558JwHISYaDZcTfE9XMRB1isDDDVorqrxpR%2fTnEi4RUCl8%3d" target="_blank" rel="noopener" data-link-source="tiny">here</a>.
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A recent report from Citi Research&rsquo;s Nathan Sheets and team looks at the outlook for the global economy as elections loom around the world and geopolitical volatility remains elevated.&nbsp;

Resilience Giving Way to Global Slowdown 

A recent Citi Research report sees electric vehicles&rsquo; global volume growing modestly this year but after that, it&rsquo;s pedal to the metal.
The authors see current EV sentiment as too negative and offer analysis and survey insights that show why that sentiment could soon improve.
The report forecasts global battery electric vehicle (BEV) volume will grow a modest 12% this year, with regional growth ranging from &ndash;1% in Europe to +6% in China and +26% in the U.S. Global penetration is seen rising to 13% this year from 12% in 2023.
That forecast is more conservative than the latest one from Standard &amp; Poor&rsquo;s. But the authors expect growth to accelerate starting next year, with annual penetration gains returning to the 3- to 4-point range. Such a pace would lift global EV adoption to 33% by 2030, with the U.S. at 37%, Europe at 40% and China at 48%.
&nbsp;Citi BEV Forecast, by Region 
<img src="/rcs/v1/media/citigpa/akpublic/storage/retrieveMediaFile/6617a67f44a24e164678e193.JPG" alt="table: Citi BEV Forecast, by Region"> &nbsp;<span class="img-div" style="box-sizing: border-box; display: block; width: 1161.65px; height: auto; border-style: none; margin: 10px 0px; color: rgb(15, 22, 50); font-family: sans-serif; font-size: 0.875rem; text-align: left; white-space: normal; background-color: rgb(255, 255, 255);">&copy; 2024 Citigroup Inc. No redistribution without Citigroup&rsquo;s written permission.
<span class="img-div" style="box-sizing: border-box; display: block; width: 1161.65px; height: auto; border-style: none; margin: 10px 0px; color: rgb(15, 22, 50); text-align: left; white-space: normal; background-color: rgb(255, 255, 255);">Source: Citi Research
For China, the authors remain constructive on BEV sales growth through 2030, but note that through 2026 demand growth will likely be stronger for plug-in hybrid electric vehicles (PHEVs).
Europe&rsquo;s BEV transition strikes the authors as a negative in absolute for all European OEMs, but they think more expensive branded BEVs will likely be less loss-making than cheaper branded BEVs.
In the U.S., on the surface it looks like EV adoption continued to progress, with new sales penetration rising close to ~8%.
But things look different if you take into account price cuts and Inflation Reduction Act (IRA) benefits needed to achieve that penetration.
Price differentials failed to disrupt the still-strong market for vehicles using internal combustion engines (ICE) or to drive EV penetration meaningfully higher, a &ldquo;rather disappointing outcome&rdquo; that has raised questions about the industry&rsquo;s ability to drive growth amid poor and declining EV profitability, increased pricing pressure and previously planned investments being pared back.
The report says the softness is more as a function of current EV market dynamics. It stresses the importance of understanding that the U.S. EV market is uneven, with trends often reflecting specific circumstances around a handful of vehicles&mdash;seven nameplates account for around 70% of total sales.
The authors characterize the U.S. EV market as having entered an &ldquo;air pocket,&rdquo; but acknowledge adoption challenges, which range from regional demand imbalances and narrowing the monthly payment gap with ICE vehicles to charging and infrastructure and a perceived political divide.
Citi&rsquo;s EV penetration matrix
The report presents Citi&rsquo;s recently developed EV penetration matrix. It works by analyzing new sales penetration across major segments at individual price bands&mdash;e.g., SUVs in the $40,000&ndash;$45,000 range&mdash;and measuring other important metrics through proprietary tracking methods.
Applying the matrix to their 2024&ndash;25 EV sales forecasts, the authors forecast 1.47 million units of new EV sales, or 9.1% penetration in 2024. For 2025, the forecast is for 2.34 million units, or 13.8% penetration.
2024 EV Segment Summary by Price Point 
<img src="/rcs/v1/media/citigpa/akpublic/storage/retrieveMediaFile/6617a8140e6e4d32f6d69d57.JPG" alt="table: 2024 EV Segment Summary by Price Point"> &nbsp;
<span class="img-div" style="box-sizing: border-box; display: block; width: 1126.31px; height: auto; border-style: none; margin: 10px 0px; color: rgb(15, 22, 50); text-align: left; white-space: normal; background-color: rgb(255, 255, 255);">&copy; 2024 Citigroup Inc. No redistribution without Citigroup&rsquo;s written permission.
<span class="img-div" style="box-sizing: border-box; display: block; width: 1126.31px; height: auto; border-style: none; margin: 10px 0px; color: rgb(15, 22, 50); text-align: left; white-space: normal; background-color: rgb(255, 255, 255);">Source: Citi Research, AFDC
<span class="img-div" style="box-sizing: border-box; display: block; width: 1126.31px; height: auto; border-style: none; margin: 10px 0px; color: rgb(15, 22, 50); text-align: left; white-space: normal; background-color: rgb(255, 255, 255);"><span style="color: rgb(15, 22, 50); font-family: Citi-Sans-Text-regular; font-size: 13px; font-weight: bold; text-align: left; white-space: normal; background-color: rgb(255, 255, 255); float: none; display: inline;"> &nbsp;2024 EV Sales Matrix Penetration&nbsp;
<span class="img-div" style="box-sizing: border-box; display: block; width: 1126.31px; height: auto; border-style: none; margin: 10px 0px; color: rgb(15, 22, 50); text-align: left; white-space: normal; background-color: rgb(255, 255, 255);"><img src="/rcs/v1/media/citigpa/akpublic/storage/retrieveMediaFile/6617a8ef44a24e164678e197.JPG" alt="table: 2024 EV Sales Matrix Penetration"> &nbsp;
<span class="img-div" style="box-sizing: border-box; display: block; width: 1126.31px; height: auto; border-style: none; margin: 10px 0px; color: rgb(15, 22, 50); text-align: left; white-space: normal; background-color: rgb(255, 255, 255);">&copy; 2024 Citigroup Inc. No redistribution without Citigroup&rsquo;s written permission.
<span class="img-div" style="box-sizing: border-box; display: block; width: 1126.31px; height: auto; border-style: none; margin: 10px 0px; color: rgb(15, 22, 50); text-align: left; white-space: normal; background-color: rgb(255, 255, 255);">Source: Citi Research, AFDC
Could PHEVs or extended-range EVs (EREVs) have a greater role to play? The report says possibly: PHEVs and EREVs can be viewed as an investment in future EV share, with automakers&rsquo; investments in these models facilitating consumer migration to EVs and ultimately greater long-term EV market share.
The report points out that the EV slowdown means the catalysts for the next leg of EV growth are arguably up for grabs. For legacy automakers, the cost-benefit analysis leans heavily toward attempting to drive the next round of that growth; if automakers wait until it&rsquo;s abundantly clear that EV demand is back, chances are they&rsquo;ll be left chasing the market again.
For more information on this subject, if you are a Velocity subscriber, please see <a href="https://www.citivelocity.com/t/r/eppublic/33DLr" target="_blank" rel="noopener" data-link-source="tiny">Global Autos - State of the Global EV Market&ndash;Navigating a Slowing &lsquo;24 EV Market</a> (28 Mar 2024)
Citi Global Insights (CGI) is Citi&rsquo;s premier non-independent thought leadership curation. It is not investment research; however, it may contain thematic content previously expressed in an Independent Research report. For the full CGI disclosure, click <a href="https://ir.citi.com/6A3IURUaezPxFLppsgdBkqidjLaLn558JwHISYaDZcTfE9XMRB1isDDDVorqrxpR%2fTnEi4RUCl8%3d" target="_blank" rel="noopener" data-link-source="tiny">here</a>.
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A recent report from Citi Research&rsquo;s Itay Michaeli and team says EV volume growth might be sluggish for a while but is set to accelerate over the longer term.

Electric Vehicles: Slow, then Fast 

US Wages and Services Prices
<img src="/rcs/v1/media/citigpa/akpublic/storage/retrieveMediaFile/662a1d0afd59c025ec217c01.JPG" alt="US Wages and Services Prices"> &nbsp;
&copy; 2024 Citigroup Inc. No redistribution without Citigroup&rsquo;s written permission. Source: Citi Research, BLS, BEA, and Haver Analytics
The report looks at several key questions shaping the global inflation outlook and delves into inflation dynamics in the US, the euro area, and emerging markets economies. The team considers the following five questions:
<ol>
<li>How is wage growth influencing broader inflation?</li>
<li>What role have supply shocks played in driving inflation?</li>
<li>Have inflation expectations been well-anchored in this cycle?</li>
<li>Will central banks hit their inflation targets?</li>
<li>Are any structural shifts at play that will shape inflation in the years ahead?</li>
</ol>
Exploring those questions yielded several key conclusions, explored in the report:
<ul>
<li>Supply-side factors have been the primary driver of pressures on good prices. Goods supply chains were disrupted by strains from the pandemic and the war in Ukraine; goods inflation has cooled in lockstep with such stresses easing. Citi&rsquo;s supply-chain pressure index has been remarkably stable in the past few months and remains near pre-pandemic levels despite geopolitical stresses that have raised shipping costs. That said, the Citi Research team notes that inflation risks remain due to tensions in the Middle East, and Chinese overcapacity has driven exported disinflationary forces for the rest of the world.</li>
</ul>
<ul>
<li>Services inflation looks more demand-driven, as pressures have stayed elevated despite supply-side improvements. The authors note that wages are putting upward pressure on services prices, with the degree varying across economies. In the US, wages and services inflation look tightly tied together, but wages have been more of a lagging indicator in the euro area due to the prominence of collective bargaining. High wage growth has also been an important driver of inflation in many emerging markets.</li>
</ul>
<ul>
<li>Inflation expectations have been remarkably well-anchored, with the authors seeing little evidence that the pass-through from actual inflation to those expectations has changed meaningfully compared with the pre-pandemic years. In the authors&rsquo; view, this development, seen across a wide range of countries, speaks to the credibility of monetary policy and central banks&rsquo; commitment to bring inflation back to target. For now, the team writes, there&rsquo;s reason to believe long-term inflation expectations won&rsquo;t rise to levels Fed officials would see as &ldquo;unanchored&rdquo;.</li>
</ul>
<ul>
<li>The report&rsquo;s base case is that inflation will gradually converge back into the vicinity of central banks&rsquo; targets, but it also notes that the speed of inflation&rsquo;s fall will vary by economy. They also continue to see two-sided risks, and cannot rule out scenarios in which the global economy returns to the pre-pandemic configuration in which many economies struggled with too little inflation rather than too much of it. A related question is how policymakers would respond to inflation remaining above target. The authors note that a shift in inflation targets&mdash;such as the Fed moving to a 3% target&mdash;seem unlikely for now. Instead, they see many central bankers operating with more flexibility than they have in the past, giving themselves a longer runway to get inflation back to target in coming years.</li>
</ul>
<ul>
<li>The report examines inflation&rsquo;s trajectory, and which factors pose longer-term upside and downside risks to the global inflation picture. Such factors include aging demographics, technological improvements, and the shifting contours of globalization. Demographics is a particularly interesting factor to consider, the Citi Research report says, as there&rsquo;s a debate about whether population aging puts upward or downward pressure on prices.</li>
</ul>
For more information on this subject, and if you are a Citi Velocity subscriber, please see the original report, dated 12 April 2024, here: <a href="https://www.citivelocity.com/t/r/eppublic/33pJG" target="_blank" rel="noopener" data-link-source="tiny">Global Economics - Where is Inflation Heading? A Tour Around the World</a>
Citi Global Insights (CGI) is Citi&rsquo;s premier non-independent thought leadership curation. It is not investment research; however, it may contain thematic content previously expressed in an Independent Research report. For the full CGI disclosure, click <a href="https://ir.citi.com/6A3IURUaezPxFLppsgdBkqidjLaLn558JwHISYaDZcTfE9XMRB1isDDDVorqrxpR%2fTnEi4RUCl8%3d" target="_blank" rel="noopener" data-link-source="tiny">here</a>.

A recent report from Citi Research&rsquo;s Robert Sockin takes a trip across the global inflationary landscape and comes away with some key conclusions: 
<ul>
<li>Demand has played a larger role than supply in pressures on services prices.</li>
<li>Inflation expectations remain remarkably well-anchored.</li>
<li>Policymakers will likely give themselves a long runway to bring inflation back to target.</li>
</ul>

Around the World: Where is Inflation Headed? 

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