Rising inflation will make deposits and bonds more attractive
14:49
The economic cycle is characterized by a very large scale of support for the economy from the monetary and budgetary policies. Some estimates say that this support was about three times greater than in the previous crisis. Therefore, many assets recovered very quickly after the pandemic. This is particularly evident in the stock market, real estate, and the commodity market. Usually, the rebound takes place later and gives room for a reaction to households and individual investors.
"I think these asset classes are at the highest risk in the near future. However, high inflation means that sooner or later the central bank will raise interest rates. In addition, it may make many more hikes than it currently announces. Experiences of some countries show that late Interest rate increases end up with the need to chase inflation with further increases. In the coming months, the attractiveness of deposits will return. However, in some time it is worth taking an interest in government bonds because their yields have risen sharply recently. This fact may mean that prices have fallen. Moreover, soon, when we deal with a peak in inflation, bonds will become more expensive, but even then this instrument will be very attractive," Rafał Benecki, chief economist of ING Bank Śląski, assessed.
