In a recent article from De Volkskrant, Mary Pieterse-Bloem, Professor of Financial Markets at Erasmus School of Economics, addresses the current situation in the financial markets. Will the central banks stop increasing the interest rate to reverse inflation?
Turmoil in financial markets has been heightened by the recent Silicon Valley Bank failure. The interest rate hike has played a major role in that process. That interest rate hike was intended to combat inflation, but it also has a major impact on companies that rely significantly on borrowed money, the professor says. Still, the turmoil in financial markets seems limited: ‘the price loss of bank shares has already partially reversed,’ Pieterse-Bloem adds.
Despite the problems caused by Silicon Valley Bank's bankruptcy, the professor does not expect the US central bank to slow down the pace of its interest rate hike. ‘Central banks are wise not to be guided in their interest rate policy by special cases like this. The development of the general price level and the general economy is much more important,’ she explained.
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You can download the full article from De Volkskrant, 15 March 2023, above.
