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2021/09/08 / Erste Group Research

Return to normality?

Interest rate hikes remain a long way off in both the Eurozone and the USA. At the same time, the central banks will begin to scale back their very expansionary monetary policies. However, both central banks will only very slowly withdraw from crisis mode.

In the bond markets, virtually no inflation risks are expected to materialize in the foreseeable future. On the contrary, yields have declined significantly again with the rise in COVID-19 infections since July. However, the availability of vaccines and the high proportion of people already vaccinated make serious new restriction measures such as lockdowns unlikely, as they do not command political majority support. In our opinion the markets therefore see the downside risks to the economic expansion as too pronounced, and we expect a correction in the bond markets.

Even after the Corona crisis slowly subsides, there will be no return to the old normal. The fight against climate change will become a defining issue over coming decades. However, at the same time there are different ways of limiting the surge in temperatures, which will be the subject of more intense national, regional and global debate in the future than has been the case to date. In the special section we show where the world currently stands.

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General information

AuthorErste Group Research
Product nameInterest Rate Outlook Eurozone, USA
Topic in focusMacro/ Fixed income
Economy in focusEurozone, United States
Currency in focusEuro, US Dollar
Sector in focus-


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