Central banks will really have to combat inflation. In all likelihood, this will lead interest rates to rise by much more than currently expected. Investors should then invest in cash, at least until interest rates have stabilised, in the view of economists at Natixis.
“In a situation of sharply rising real interest rates, this points towards investors shunning risk-free bonds, listed equities, cryptocurrencies, real assets and risky bonds.”
“In a configuration where central banks really want to combat inflation, investors may therefore seek refuge in cash, despite the inflation, pending a stabilisation of interest rates.”
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