Financial expert Dr. Bert Flossbach: ECB will maintain interest rates for the time being - impact on public finances in view

Financial expert Dr. Bert Flossbach: ECB will maintain interest rates for the time being - impact on public finances in view

According to a report by www.finanzen.net, it is foreseeable that the European Central Bank (ECB) will maintain its interest rate level for the time being. Dr. Bert Flossbach, co-founder of the asset manager Flossbach von Storch, is convinced that the ECB is keeping an eye on both price stability and the impact on public finances.

The ECB's decision to maintain interest rates has a direct impact on various areas. On the one hand, this signals that inflation in the eurozone could return to the 2 percent target if interest rates are kept at current levels. This influences the decisions of investors and consumers as the yield and interest rate structure of bonds could change. Government finances are also in focus, as unsound government finances endanger price stability and can have an impact on inflation.

Bundesbank President Joachim Nagel has warned of unsound government finances that could endanger price stability. This makes it clear that central banks have a conflict of interest between combating inflation and financial market stability. This challenge is particularly clear in the face of highly indebted countries in the Eurozone, such as Italy.

According to Dr. According to Bert Flossbach, the ECB's challenge is to balance the yield levels on government bonds in various euro countries in order to ensure financial market stability. If the yield differences widen significantly, this could lead to a flight to bonds that are considered safe. As a result, the ECB may have to intervene and purchase Italian bonds, which would sacrifice the primacy of fighting inflation in favor of financial stability.

In view of these developments, Dr. Bert Flossbach has already returned to bonds in his “Multiple Opportunities” fund, including US Treasuries and corporate bonds, while he concentrates on quality stocks when it comes to stocks. This highlights the economic impact that central bank decisions can have on the bond and stock markets.