The experts of banks and insurance companies expect interest rates to increase in this and the forthcoming quarter. At the same time they predict a higher oil price and a depreciation of the Euro. These are the results of the first IW Financial Expert Survey of the Cologne Institute for Economic Research (IW). The survey is the continuation of the former ZEW-Prognosetest of the Centre for European Economic Research (ZEW).
The experts of the 14 surveyed financial institutions predict on average that the interest rates on German government bonds with a maturity of 10 years will increase from currently 0.34 per cent to 0.56 per cent by end of September. In addition to that, they predict a higher short-term money market rate. Moreover, they expect the oil price to hike by 3.1 percent by the end of the third quarter 2017.
Stock markets are expected to stay calm. The forecasts for the European Stoxx 50 as well as for the German stock market index DAX indicate mild losses at worst. The outlook for the Euro reveals a weaker Euro vis-a-vis the US-Dollar. The experts expect on average that the European single currency will depreciate by 2.3 per cent by end of the third quarter 2017.
The ZEW has surveyed the forecasts of financial institutions for six relevant economic indicators on a quarterly basis since 2001 together with an evaluation of their forecast accuracy. The IW Financial Expert Survey continues this work and the methodology in order to reach comparable results. “The survey of financial experts is a reliable tool and it should continue to serve as a reliable gauche for the development of the relevant financial market indicators”, says IW-economist Markus Demary.
Professional forecasters of 14 financial institutions took part in the current survey. In the last 10 quarters the experts of Commerzbank reached the highest forecast accuracy followed by the experts of Hamburger Sparkasse and UniCredit. The next IW Financial Expert Survey will be published in the first week of July.
We argue that the period of low inflation has come to an end based on six structural factors, which define the new inflationary environment.
The rapid recovery of demand combined with supply constraints has led to rising prices during the past months. This is evident in oil and gas markets, but also in international trade, which has been thrown out of step by bottlenecks at Asian ports.