Statement on the current ECB interest rate decision
Prof. Dr. Felix Schindler, Head of Research & Strategy, HIH Invest
“The ECB is following market expectations with the interest rate hike of 25 basis points. The inflation rate in the eurozone is now over three percent for the year and thus above the ECB’s inflation target. Energy prices in particular have risen significantly again in recent weeks. However, the rise in the core inflation rate since the outbreak of the Iran war also shows that the price increase goes beyond the energy component and extends to more and more goods and services. As the military escalation in the Middle East and the blockade of the Strait of Hormuz increases, this development is likely to continue in the coming months. The heat and drought period of recent months is also likely to continue to drive up prices, especially for food.
Despite the numerous geopolitical and economic uncertainties, the economic situation in Germany in particular is proving to be more stable than was expected in the spring. Reservations about an interest rate hike have thus decreased. On the capital markets, the key interest rate hike by the ECB was anticipated. Capital market interest rates have already risen significantly in recent weeks in the wake of rising inflation rates and government debt as well as the expansionary fiscal policy worldwide.
The interest rate hike is unlikely to have any significant impact on the real estate markets. On both the investment and financing sides, the markets are more subject to the development of long-term capital market interest rates. The real estate industry will have to prepare for a prolonged phase of higher interest rates and adjust its business models in many cases. Globally impacting megatrends and asset management capacities will increasingly determine investment success.”
