To set the scene, we started with a macroeconomic overview from Edin Mujagić, Chief Economist, OHV Vermogensbeheer. He skillfully delved into the evolution of our economic landscape, a stark departure from years of relative inertia in inflation and interest rate policy.
Edin took us on an enlightening journey through the realm of central banks, starting with:
- ZIRP (Zero Interest Rate Policy): Implemented in 2008 to consciously stimulate inflation.
- NIRP (Negative Interest Rate Policy): Despite adoption, failed to spur inflation.
- QE (Quantitative Easing): Central banks invested substantial sums in corporate bonds, with the European Central Bank, for instance, spending €60,000 per second.
- YCC (Yield Curve Control): Implemented in Japan, involving measures to keep interest rates low at all costs.
Together, these factors created change. Edin warned the audience not to see change as a threat, you need to anticipate it, prepare and respond. He cited that this is difficult but not impossible. The new coordinated messages from central banks around the world was ‘higher for longer’.
Notably, 66% of participants did not anticipate a continued increase, aligning with Edin’s perspective that while inflation may remain high, further rate hikes are unlikely.
In the prevailing economic climate, where the '2% in 2025' mantra prevails, central banks signal a reluctance to raise rates. When questioned about the likelihood of a U.S. recession, Edin suggested it might not be a technical recession but could certainly feel like one.
Amidst the challenges, Edin offered a positive outlook, anticipating a wave of innovation. Drawing from economic history, he highlighted the recurring theme that crises often serve as fertile ground for the birth of innovation and technological advancements.
Concluding on a light note, Edin humorously remarked that the probability of our audience correctly pronouncing the name of the longest place in Wales surpassed the likelihood of interest rates ascending—an amusing touch to a session that navigated through complex economic landscapes.
After having spent some 15 years in a coma, interest rates are awake. They have increased sharply and the trend is upward.
- I agree 19%
- I disagree 66%
- Don’t know 15%