The loose competition continues! Investors expect the Fed and the European Bank to maintain low interest rates for a long time

A survey by Deutsche Bank shows that a considerable number of investors expect that the Fed and the European Central Bank will still maintain a slightly loose monetary policy for a long period of time.



Deutsche Bank conducted a market sentiment survey of more than 600 investment professionals around the world from October 6 to 8. For the Fed, the survey showed that 42% of people expected the Fed to remain slightly dovish, and 24% expected that the policy would be "Roughly correct," 33% of people expect the Fed's stance to be more hawkish.

For the European Central Bank, respondents believe that the central bank is more likely to make dovish policy mistakes. 46% expect the ECB policy to continue to be loose, 26% believe that the policy will be “roughly correct”, and 21% believe that the ECB is prematurely or excessively tightening.

For the Bank of England, 45% believe that the central bank’s risk of hawkish policy errors is greater, 20% believe that the policy will be “roughly correct”, and 20% believe that it will remain dovish.

It is understood that in recent weeks, major central bank policymakers have been cautious, seeming to adopt a "wait and see" attitude towards the prospect of inflation and interest rate hikes.

Andrea Enria, chairman of the European Central Bank’s board of supervisors, said on Thursday that although the euro zone’s economic outlook has improved, “cautiousness remains the key”.

At the September meeting, the European Central Bank postponed some important decisions to December, but since then, soaring energy prices have pushed the Eurozone inflation rate to a 13-year high of 3.4% year-on-year. Analysts expect that inflation in the euro zone will continue to rise. Fabio Balboni, a senior economist at HSBC, said in a research report on Monday that although the differences within the European Central Bank are widening, Lagarde may give reasons at the October meeting, requesting Maintain a highly relaxed stance.

The Governor of the Bank of England Bailey gave the clearest hint so far on Sunday that the UK may raise interest rates and said the Bank of England will “have to take action” to curb inflation.

David Page, head of macro research at AXA Investment Managers, pointed out in a report last week: “We have changed our forecasts. We expect the Bank of England to raise interest rates for the first time in February next year. 0.15% to 0.25%). Then we consider the second (to 0.50%) and third (to 0.75%) rate hikes in August. However, the short-term interest rate market considers a faster pace of rate hikes, including The first interest rate hike in December this year has almost completely digested the expectation of raising interest rates to 1.00% by the end of 2022."

Most investors surveyed by Deutsche Bank predict that the Fed and the European Central Bank will maintain low interest rates for a long time, and the U.S. dollar and the euro will therefore still be in a pattern of "competitive devaluation". Investors need to pay attention to this.



GMT+8 At 8:30 on October 19, the U.S. dollar index was reported at 93.88.