Editorial: Tough job

Dealing with high inflation and low growth is a tough job for central banks. Inflation requires higher rates, while low growth needs the boost of lower rates. Add the challenge of maintaining financial stability into the mix, and the job gets even tougher. 

On March 22, markets were eagerly poised to see what central banks in the UK and US would do when they announced interest rates later that day. The Bank of England was processing unexpectedly higher inflation, while 12 days earlier, the Federal Reserve had a close brush with financial instability after the collapse of Silicon Valley Bank.

At the start of the year, the economic outlook was looking better than at the end of 2022 for many people, including Colin Purdie, a chief investment officer at Aviva Investors. Purdie tells us the bearish narrative around New Year has changed, but inflation still poses a risk to investors. Certainly, the UK numbers showed this.

Meanwhile – to illuminate the issues with withdrawing cheap money when financial instability is a concern – we can perhaps look to the famous Warren Buffett quote about ebbing tides revealing naked swimmers. Maybe it is right to fear that SVB, and a cohort of other financial businesses, merely heralded the start of wider problems.

Nick Fitzpatrick, Group Editor, Funds Europe

© 2023 funds europe

HAVE YOU READ?

THOUGHT LEADERSHIP

Innovative US companies are providing some of the solutions to the climate crisis and transition to a more sustainable economy. We see potential opportunities in areas including renewable energy and…
FIND OUT MORE
This white paper outlines key challenges impeding the growth of private markets and explores how technological innovation can provide solutions to unlock access to private market funds for a growing…
DOWNLOAD NOW

IRELAND SPOTLIGHT

Visit our dedicated Ireland channel for all the latest news and analysis on the country's investment industry.
READ MORE

PRIVATE MARKETS FUND ADMIN REPORT

Private_Markets_Fund_Admin_Report

LATEST PODCAST