Recent months’ economic indicators have underlined that the economy is delivering fairly robust growth rates these months. Coupled with an inflation lift this has made the discussion about a coming rate hike topical. Thus there are prospects of a tightening bias at the US central bank, and combined with slightly stronger European growth and inflation numbers in Q2, the scene is set for continued rising bond yields and a flatter yield curve, assesses Søren Nielsen.
The ECB has gradually moved further away from a rate cut as it finds that it has done enough to support domestic demand and that the latest improvement in confidence indicators supports this. However, Søren Nielsen does not expect the ECB to follow the USA and hike rates this year as the domestic part of the economy, and thus the domestic inflationary pressure, is still too weak.
Read ‘Rate hike in the US sets the agenda’ in Focus no. 81 at the website of the Copenhagen Stock Exchange www.cse.dk. Questions to the author may be sent to the e-mail address info@cse.dk until 7 May 2004.
