Inflation has emerged as one of the top concerns for central bank reserve managers, alongside a failure to end the COVID-19 crisis and soaring debt levels, Reuters cited the results of a UBS survey.
Fears about inflation and uncontrolled rises in long-term yields were raised by 57% of respondents as a main risk to the global economy, according to the Annual Reserve Manager Survey 2021. Failure to end the pandemic was cited as a worry by 79% of respondents, with 71% stressing out government debt levels. Also, half of the participants in the survey believe the COVID-19 virus will be over only after 2022, Reuters adds.
More than two-thirds of participants expect the US Federal Reserve to raise interest rates in 2023, while 30% expect the Fed to do so in 2022. In contrast, participants expect a later hiking cycle for the European Central Bank, with 33% expecting the first interest rate increase in 2023, 41% in 2024, and only 26% later than 2024.
Asked how far leading central banks might go to support markets and the economy if needed, 58% of respondents think the Fed could turn to yield curve control.
Nearly 40% of respondents expect wholesale central bank digital currencies to be launched within the next three years.
The survey was conducted during April and June 2021 and involved responses from close to 30 global central banks reserve managers.
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