More rate hikes: Jackson Hole confirms roadmap for central banks

From the time it was first held, the annual meeting in Jackson Hole, Wyoming has been an opportunity for representatives from the main central banks to discuss the most important challenges facing the global economy. The participating institutions also consider the roadmap they hope to follow and look for ways to put their monetary policies into alignment. This year both the European Central Bank and the Federal Reserve, represented by its chairman Jerome Powell, acknowledged the need to act decisively in order to prevent an entrenchment of inflation. The need for rate hikes emerged as the consensus among the experts at this year’s gathering, in view of the upcoming meetings of the ECB. The only unknown factors still remaining are the pace of those rate increases and how aggressive they will be.

The Fed was the first major central bank to announce rate hikes as a way to rein in rising prices. In turn, the ECB has been following in the wake of its American counterpart, to the extent that there are no expectations that any change of position will come from that institution. Daniel Sancho, head of investment at MAPFRE Inversión, thinks that the ball is now in Christine Lagarde’s court (in view of the emerging inflation data and problems with energy), and he rejects the possibility of any new direction in monetary policy since it “would have a very negative impact on the markets”.

And although the summer months tend to represent a calmer, less volatile period for the securities markets, he explains that the current reality is one where “the story hasn’t changed and advising continues to be fundamental”. With the months of July and August now behind us, this expert points out that the major indexes remain in a state of turbulence, but he also emphasizes that despite this uncertainty (which investors will continue to experience for a while), opportunities can arise through active management, which he sees as especially important in this context.