ING – Monthly, Oct 2023

The repoort discusses the rise in longer-term interest rates, particularly in Germany and the US, and the potential impact on governments' debt servicing costs. Factors such as higher oil prices and inflation contribute to these increases. The introduction highlights the concern that these high interest rates could push both the US and eurozone economies into recession. The financial markets, meanwhile, believe that these rates will remain high for an extended period. This poses a challenge for central banks like the European Central Bank (ECB), who argue for further rate hikes to combat inflation. However, with the longer rates staying elevated, there is a growing risk to the economies. Consequently, the assumption is that central banks, including the ECB, will eventually begin cutting rates again next year due to the weakened global growth prospects.