After the economic turmoil caused by the COVID-19 pandemic, developed economies faced inflation rates reminiscent of the early 1980s. With the United States and the United Kingdom embarking on an unprecedented cycle of interest rate hikes to counter inflation, investors were left wondering about the potential impact on equity markets. Specifically, the question was whether this rapid rise in interest rates would favor either Value or Growth equities and to what extent. In July 2021, we analyzed historical stock returns from the 1980s to 2021 in both regions to understand how equity performance was affected when interest rates surged aggressively.
