2023-09-01T14:12:00+03:00 Economy 2024-08-15T04:49:48+03:00

Ukrainian news

Inflation expectations in the EU reached the highest level since 2010, - expert

Inflation expectations in the EU reached the highest level since 2010, - expert

Inflation expectations in the European Union have reached their highest level since 2010. However, in the coming years, the European Central Bank will not be able to return inflation to the target level of 2% despite continuing tight monetary policy.

The banker, investor Denis Gorbunenko, expressed such an opinion on his Facebook page. He noted that the discount rate on a five-year forward inflation swap (a derivative financial instrument that allows you to exchange rates between a fixed and floating inflation component over 5 years) is now 2.66%.

“The essence of the agreement is that one party (the inflation swap seller) agrees to pay the other party (the inflation swap buyer) a fixed interest rate that reflects expected inflation over five years. The other party agrees to pay the seller of the inflation swap a floating rate based on real inflation during that period,” Gorbunenko writes.

The expert predicts that against the backdrop of cautious market expectations for inflation dynamics in the coming years, "investors will continue to diversify their investment portfolios towards investing their funds in real assets." This is primarily about real estate or gold, which, "are traditionally considered as a protection against inflation" according to the banker.