Investors uncertain about timing of possible rate hikes – AllianzGI

Institutional investors around the globe do not foresee any central bank rate hikes any time soon, according to a recent survey from Allianz Global Investors.

As the survey’s results highlighted, whilst 42% of all respondents believe that the central banks will start to increase interest rates toward their long-term historical averages no earlier than 2016, only 30% expect any change in 2015 and just 28% before that.

North Americans and Japanese expect central banks to become hawkish in 2015, the survey also revealed.

However, there are significant differences by region: With 56% most of the European respondents do not see rising rates in the next two and a half years.

Franck Dixmier, Chief Investment Officer Fixed Income Europe at Allianz Global Investors, said: “In a context of sluggish growth outlook and with the European debt crisis still looming, most European investors do not see any scope for rising interest rates in the near- and mid-term”

In North America and Japan, investors anticipate a change in the central banks’ towards higher interest rates already in 2015.

Almost half (48%) of Japanese respondents said they would assume the interest rate to rise in 2015, with a tendency towards the beginning of that year. 42% of investors from North America expect a rate hike during 2015, AllianzGI also revealed.

“Although the discussion about tapering that the US Federal Reserve introduced in June does not necessarily entail a regime switch towards rising rates, apparently there is a broadly shared feeling among investors that the economic cycle in the US is ahead the European which could possibly bear higher rates”, says Doug Forsyth, Chief Investment Officer Fixed Income US at Allianz Global Investors.

Andreas Utermann, Global CIO at Allianz Global Investors added that, although it is normal to see views varying by region, the overall degree of uncertainty among investors across the world remains “disconcerting”.


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