The European Central Bank has raised the key interest rates probably for the last time in this interest rate cycle. But the rising oil price poses a risk that the ECB has only taken a pause.
Currently, the most important indicators point to average global economic growth and falling inflation. The probability of an immediate recession has decreased significantly. But the risks in the medium term remain. Chief economist Gerhard Winzer explains which three scenarios are currently emerging in the blog post.
The global economy is proving to be increasingly robust against a number of headwinds. Due to the uncomfortably high level of inflation, the central banks are likely to stick to their tight interest rate policy for longer than expected.
The key interest rate of the European Central Bank (ECB) is currently 2.50 percent. Savings account interest rates are significantly below this key interest rate, and if someone takes out a loan, they usually have to pay significantly more than the key interest rate. The role of the key interest rate and the relevant interest rates are discussed in this article.
Gerhard Winzer, Chief Economist at Erste Asset Management, provides an overview of recent economic developments and explains, among other things, what structural problems the euro is facing.
Inflation has been the underlying factor in economy for some time. A recovery of GDP on a pre-pandemic level should be reached soon. The probability of a growth phase has increased. What further developments are expected?
Within two years, the global economy has been confronted by two negative events or, indeed, shocks: the Covid pandemic was the first one, having not only killed six million people globally at this point, but having also caused an unprecedented slump in the global economy and the subsequent recovery. The second one, i.e. the invasion of Ukraine by Russia, is of a geopolitical nature and has triggered a commodity price shock.
The interest rates seem to have been going one way for years – down. With the exception of a few corrections, the taboo has been broken for many years that bond yields should have to be positive all the time.
The central bankers’ assessments regarding inflation and the labour market are considered important indicators for future interest rate policy. More on our blog.
Let’s start with a trip down memory lane: Do you remember the scenery 30 years ago – on the financial markets, and in our personal lives? The 1980s – many of the older generation are still thinking back to the “good old times”. There were no smartphones and no data kraken. Instead, we had shoulder […]