Ulrich Creydt, Tax Consultant and Managing Director, Ypsilon Group:
“It is not surprising that the ECB is leaving the interest rate at the previous level. It had already raised the key interest rate by 25 basis points in mid-June. Since then, the most important economic fundamentals have hardly changed. Only crude oil prices have risen more sharply in recent days since the US took stronger military action against Iran.
It remains to be seen whether these military strikes are temporary or permanent. If the Iran war were to escalate, the German economy could suffer due to massive energy price increases and supply chain disruptions: Inflation and consumer prices could rise and the ECB could raise interest rates at the next interest rate decision on September 10.
At present, however, a wait-and-see attitude dominates, combined with the confidence that the current geopolitical upheavals do not require a change in monetary policy. Stable interest rates are good for the real estate market, which is currently more resilient than expected. Despite many geopolitical crises, the number of transactions in the investment sector even increased in the first half of the year compared to the same period last year.
Prof. Dr. Steffen Sebastian, Chair of Real Estate Finance, IREBS Institute for Real Estate Economics, University of Regensburg:
“Inflation in the euro area weakened to 2.8 percent in June, but remains well above the target of 2.0 percent. After renewed attacks in the Middle East, oil prices have now risen again, which is likely to increase inflation. The ECB is in a dilemma: on the one hand, it wants to prevent elevated inflation from becoming entrenched, and on the other hand, it does not want to shatter hopes for economic growth. The interest rate pause had been expected by most market observers. For the rest of the year, however, the swap markets have already priced in one or two interest rate hikes. The decisive factor will be how the war in Iran and thus energy prices develop. But not every new uncertainty leads to a permanently higher interest rate level.
Francesco Fedele, CEO of BF.direkt AG:
“Even though the ECB is focusing on stability in its latest interest rate decision, long-term interest rates are unlikely to fall significantly this year. We have now permanently arrived in a global political phase of uncertainty. Even if the wars in Ukraine and Iran are over, the old world order will not return. It is in this environment that business decisions will now have to be made. In the case of portfolio financing, we recommend a long-term fixed interest rate, provided that the project is viable for this. At the moment, it is not possible to start approaching the financing partners early enough. Since the banks check very carefully, careful and complete preparation of the documents is also more important than ever. If you want to avoid risk premiums, you have to provide maximum transparency yourself.
Claudius Meyer, Managing Director of CR Investment Management:
“As expected, the European Central Bank has left key interest rates unchanged. This decision had already been priced in by the market and provides the necessary planning security. The lack of a change in interest rates is an important signal for the stabilisation of the market. A further interest rate hike would have created additional pressure, especially in problem properties in connection with upcoming refinancings and in already illiquid market segments. In view of the existing challenges, it is positive that the ECB ensures continuity and does not create further uncertainties.”
