Its CEO largest sovereign wealth fund in the world argues that there is a lot of uncertainty in the financial markets at the moment, but the main concern of investors is the what a rally could mean goods on the inflation outlook.
THE Nikolai Tangenits CEO Norges Bank Investment Management (NBIM)he said in an interview on CNBC that surging energy and commodity prices could prove a major headache for major central banks as they continue to fight inflation.
It should be noted that the benchmark of the performance of global raw materials, S&P GSCI, has registered an increase of 9% since the beginning of the year, outperforming the S&P 500.
Its prices oil and his copper have climbed about 13% since the beginning of the year, while o gold has repeatedly set new record highs in recent months.
Asked if he has concerns about commodity markets, Tangen said yes. “Yes, the big worry for investors is exactly what this might mean for inflation. If her prices energy and raw materials continue to move upwards, this will be transmitted to the prices of finished products, which will be higher. This could turn the tables on inflation expectations.”
NBIM manages the so-called Norwegian Government Pension Fund Global. The largest state wealth fund in the world, which was valued at 17.7 trillion kroner ($1.6 trillion) at the end of March, was founded in the 1990s to invest the excess revenue of the sector oil and natural gas of Norway.
To date, the fund has invested in more than 8,800 companies in more than 70 countries around the world, making it one of the largest investors worldwide.
Interest rate cuts
The President of the European Central Bank, Christine Lagarde, he had also pointed to the impact of commodity prices last week in the broader context of announcing the next steps in monetary policy.
She said the central bank remains on course to cut interest rates unless there are significant shocks, but stressed that the ECB should be extremely cautious about commodity price movements.
Eurozone inflation slowed more than expected to 2.4% in March, boosting expectations for a short-term rate cut.
Market pricing for rate cuts, which has been highly volatile in recent weeks, now suggests that the ECB looks set to ease its monetary policy before the US Federal Reserve.
With most measurements to place him inflation of the US around 3%, markets were pricing in a 13 percent chance of a U.S. rate cut in June, according to the tool CME Group’s FedWatch. That’s down from nearly 70% last month.
Tangen argued that Norway’s sovereign wealth fund still believes that it will be difficult for central banks to achieve their inflation targetwhile he emphasized that the various large central banks will act differently, depending on the current macroeconomic data.
Acknowledging the multiple factors now fueling inflation, he said: “We are dealing with geopolitical tensions, the problems that climate change is creating for food and supply chain changes, while wage inflation is also higher than we might have expected.” .
“We expect fewer declines interest rates than the market. I must say, however, that the market did not react as negatively as I expected“, he added.
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