The global recovery, although uneven and fragile, is progressing, and we are approaching a transition phase – taking the first steps on a path toward normalization, if you will. Eventually, the global headwinds will dissipate and central banks will be able to transition away from unconventional policies and return to more conventional ways of conducting monetary policy.
This will mean a return to two-sided risks, where interest rates could rise or fall depending on how economies evolve. During this transition toward normal, more financial volatility is to be expected. To me, these seem to be legitimate reasons to expect higher financial market volatility today. And is the volatility we’re seeing now abnormally high? No.