Ukrainian conflict could make ECB rethink timing of rate rise
Colin Finlayson, co-manager of Aegon Asset Management Strategic Bond portfolios comments ahead of the ECB monetary policy decision today:
“Bond markets started this year focused on inflation and what that was going to mean for central banks. But that narrative has been turned completely on its head. We are now focusing on the escalating conflict within Ukraine and how this could change thinking at the ECB. The escalating conflict is going to have material macroeconomic implications in two mains ways.
“Firstly, inflation will remain higher for longer. The rapid increase in energy prices means already high levels of inflation will stay elevated for much longer.
“Secondly, there is going to be an impact on economic growth. Sentiment will be dented, and higher energy costs will begin to impact economic activity. Europe in particular is going to be more sensitive to that. Central banks will have to begin to think more carefully about their anticipated tightening paths. We still think the US Federal Reserve and Bank of England will continue to raise rates in the coming period.
“But in Europe, where removal of some stimulus is required, given the level of inflation, we could see a more cautious approach from the ECB now in how they go about doing that. This will be a key driver for markets in terms of sentiment and direction of policy in reaction to the economic effects of the Ukraine conflict.”
Über Aegon Asset Management
Aegon Asset Management is an active global investor. Our 375 investment professionals manage and advise on assets of €410 ($466/£344) billion (as at December 31 2021) for a global client-base of pension plans, public funds, insurance companies, banks, wealth managers, family offices and foundations.
We organize our investment capabilities around four focused investment platforms where we have extensive asset-class expertise: Fixed Income, Real Assets, Equities and Multi-Asset & Solutions. Each platform has dedicated teams, organized globally and committed to maximizing their specialist areas. We also manage a EUR32 billion (as at December 31 2021) Fiduciary and Multi-Manager business in The Netherlands. These platforms and the Fiduciary business are supported by a team dedicated to responsible investing.
By organizing our investment teams globally, we work to harness our expertise and research resources across regional boundaries. We believe this enhances our performance potential and helps provide better investment outcomes for clients.
Across platforms, we share a common belief in fundamental, research-driven active management, underpinned by effective risk management and a commitment to responsible investment. Our investment platforms have the flexibility to organize their resources and processes to best suit their area of focus.
We are a global business: Our 1,200 employees work across Europe, the Americas and Asia. We invest globally and serve clients locally.
For more information about Aegon Asset Management, visit www.aegonam.com
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Global Head of Communication
Telefon: 44 (0)207 200 2510
E-Mail: adrian.cammidge@aegonam.com
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