An inflationary environment that is anything but transitory, the volatility arising from Russia’s invasion of Ukraine and other geopolitical crises, and a bevy of controversies surrounding ESG investing dominated headlines this year, while the fall of Allianz Global Investors and an exceptionally busy regulatory year were also among Pensions & Investments’ top 10 stories of 2022.

The top story this year was inflation and the Federal Reserve’s aggressive actions to curb it through multiple interest rate hikes. After more than a decade of near-zero interest rates, the Federal Open Market Committee’s moves sparked a web of economic chain reactions that hit institutional investors’ portfolios hard — the full impact of which have yet to be seen. Other big stories of the year included the U.K. gilt crisis and the impact of a cryptocurrency meltdown, including efforts to regulate it.

1. Inflation, interest rate hikes and their impact on market returns
When rising inflation emerged in 2021, spurred in part by supply chain issues, observers in the institutional investing industry questioned whether inflation was a long-term issue or a transitory effect of the gradual reopening of the economy during the second year of the COVID-19 pandemic. That question was decidedly answered by the Federal Reserve in 2022, whose fight against inflation that defined the year in investing reached its end point on Dec. 14 when the it raised the federal funds rate to a range of 4.25% to 4.5%. It was the Federal Open Market Committee’s seventh time raising rates in as many meetings after 75-basis-point increases in June, July, September and November, a 50-basis-point increase in May and a 25-basis-point increase in March.

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