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How central banks react to the global situation caused by the war in Ukraine


According to him, the markets are agitated, each news on the above topics causing movements that are difficult to fit into certain patterns. Every increase in interest rates by central banks is assessed by investors, who are trying to anticipate whether or not it will slow down economic growth.

Moscow’s latest request that “unfriendly” states pay for Russian gas in rubles has been met with a firm refusal. This has the potential to create a de facto embargo on Russian gas in Europe. Some European countries are starting to prepare for this event. The Dutch government has launched a campaign urging people to use less central heating and take shorter showers to save energy and reduce the country’s dependence on Russian fuel imports. Italian Prime Minister Mario Draghi said in an interview with Corriere della Sera that Europe could reduce Russian gas imports faster than previously estimated, as there was gas in storage and “we will get gas from other suppliers”. In Germany, Finance Minister Christian Lindner said that “dependence on energy imports from Russia must be reduced quickly and permanently. An important contribution in this regard has the floating Liquefied Natural Gas terminals, for which we should now release the funds “.

In Romania, the reference interest rate is already 3%, even lower than in the Czech Republic where it is 5%, Poland – 4.5% and Hungary – 4.4%. On the other hand, Bulgaria and Slovakia still have key interest rates at 0%.

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In Asia, several central banks have taken anti-inflationary measures, tightened monetary policy, and some have raised interest rates. Bank of Korea raises interest rate for first time in three months by 25 basis points to 1.5% in a bid to cut inflation to 4.1%, double the target of 2% of the bank. New Zealand raised interest rates for the fourth straight session with a surprising 50 basis points to 1.5%.

On the other hand, in China, concerns about the slowdown in growth are triggered not only by the risks posed by the Ukrainian conflict, but also by the blockages caused by the Covid pandemic as well as a weak real estate market. The latest GDP data was positive, with an expansion of 4.8% in the first quarter of the year, but unemployment rose and retail revenues fell by 3.5% for the first time since 2020. While maintaining the interest rate at 3.7% in order to increase market liquidity, the People’s Bank of China would reduce the amount of deposits that banks must hold as required reserves. It is for the first time this year, releasing about 530 billion yuan ($ 83.25 billion) in long-term liquidity to prevent a sharp slowdown in economic growth.

The complex global situation, the fear of a possible economic slowdown, rising interest rates, the political situation, monetary policy, corporate income and supply chain issues have made the latest American Investor Association survey of investor sentiment the lowest. optimism for the last 30 years. Expectations that stock prices will rise over the next six months have fallen to 15.8%. This is one of the 10 lowest values ​​in the history of the survey, which began in 1987. The bull-bear difference of -32.6% is also an unusually low figure. But statistically, the S&P 500 index was above average and above average over the six- and 12-month periods that followed unusually low values ​​for growth sentiment and the difference between those who see growth and those who see it. I see a decrease.

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However, Romanian investors are more optimistic about the prospects for the growth of the S&P 500 index in the next 12 months, 37% considering that it will increase, an increase of 3% compared to December 2021, the eToro Retail Investor Beat survey showed.

Bogdan Maioreanu, an eToro market analyst and market commentator, has over 20 years of experience in financial services and investment, as well as a solid background in journalism. He held various management positions in the Corporate Banking area at Raiffeisen Bank and OTP Bank, before moving on to business consulting, working for several companies, including IBM Romania. Bogdan holds an Executive MBA from Asebuss and Washington University.

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