Markets are expecting the European Central Bank to lift interest rates this week, but rates may still have higher to go, says Markus Müller, the Private Bank's head of the CIO office and Chief Investment Officer for Sustainability. “The inflation pressures are real, as we can see in the data, and not just in Europe”, Markus says, adding that the US central bank is less likely to raise rates, but potential rate cuts could be pushed out further into the future.

Stocks, meanwhile, should continue to rise, so long as inflationary forces remain reasonably controlled, Markus says. “We see room for further equity gains over the next 12 months”, noting that earnings growth has become broad-based across sectors.

 

Aside from the ECB decision, inflation reports in both the US and China will be of interest, Markus says, noting that rising prices in China are being taken as offering views into the behaviour of Chinese consumers and the country’s domestic economy in general. “So a sharp fall here could be seen as a warning bell of underlying economic problems.”

 

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In Europe, Middle East and Africa as well as in Asia Pacific this material is considered marketing material, but this is not the case in the U.S.

The value of an investment can fall as well as rise and you might not get back the amount originally invested at any point in time. Your capital may be at risk.

No assurance can be given that any forecast or target can be achieved. Forecasts are based on assumptions, estimates, opinions and hypothetical models which may prove to be incorrect. Past performance is not indicative of future returns. Performance refers to a nominal value based on price gains/losses and does not take into account inflation. Inflation will have a negative impact on the purchasing power of this nominal monetary value. Depending on the current level of inflation, this may lead to a real loss in value, even if the nominal performance of the investment is positive.

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