Investors fear the "devastating effect" on the economy of the rate hikes defended by central banks

• Risk premiums Should Spain worry about the ECB's rate hike?

A senior official from

(ECB) commented privately a few days ago that one thing is what the markets want, because it is better for their objectives, and another thing is what he believes the ECB itself has to do.

I was saying this in connection with the imminent rate hike (their amount and speed), and the truth is that the interests of both parties may not coincide, but they are closely related and in recent days, investors are showing signs of their concern that this rise will lead to

or, even worse, to a new

.

It occurs in Europe and also in the United States, where the appearance of

in the Senate yesterday focused the attention of those investors.

The markets are moving these days between the doubt that the regulators have arrived late to the monetary normalization process and the fear that the rate movements will take time to control inflation and exacerbate the slowdown in the economy.

Others fear, even, that they brake too much.

"The slew of central bank action in the past week has shown that many are ignoring the

.

This dynamic poses serious risks to growth and we now estimate that the revival of economic activity in the US will stall in the coming quarters," notes

, the largest global asset management firm, in its weekly research commentary. "Attention it is focused on the Fed and we think it will eventually change course, but not before causing growth to stall.

This raises the specter of weak growth in a context of persistent inflation," he adds.

His message aligns with that of other investors, analysts and management firms trying to gauge the recession risks they face in the midst of the fight against inflation.

The Federal Reserve raised interest rates a further 0.75% last Wednesday (the biggest move since 1994), leading a round of hikes by central banks around the world, including the Swiss National Bank (+0.5% ) or the Bank of England, which rose another 0.25% in the same week.

In the

, the ECB announced at its last meeting that in July it will carry out the first rate hike in 11 years.

In your case, the path of increases will also be marked by the impact that the new monetary policy will have on sovereign debt and the risk premiums of peripheral countries.

The so-called

has become one of the main concerns of the Eurobank, as recognized yesterday by the entity's vice president,

, when speaking of the "undesired fragmentation" that threatens the region.

During his speech at the summer course organized by the Association of Economic Information Journalists (APIE) at the Menéndez Pelayo International University (UIMP), De Guindos emphasized the importance of developing anti-

instruments to "fight against the increase in risk premiums unwanted" and to deal with price increases.

"Having an anti-fragmentation instrument is freeing up monetary policy to be able to act more forcefully against inflation," Guindos pointed out, specifying that this does not necessarily mean that rate hikes are going to speed up or gain in intensity, since any decision of the central bank will be "data dependent".

risks

In a macroeconomic context also marked by the war in Ukraine and the effects of the pandemic, the ECB works with two hypothetical scenarios: on the one hand, a real scenario in which "growth projections are positive" and, on the other hand, an alternative scenario, "more adverse" in which more negative hypotheses are contemplated.

“The longer the inflation spike and central bank interest rate hikes last, the greater the risk of a recession,” says

, Global Markets Strategist at

, addressing the recession/no-recession dilemma.

For

, global CIO of the investment firm

, "the markets must prepare for a slowdown in growth with high inflation."

Both in the US and in Europe, the latest inflation figures are above 8% and that raises the risks.

"The probability that the US will experience a recession in the next 12 months has increased recently; in Europe, the economy is cooling more markedly and a recession would be inevitable if a Russian gas embargo were imposed or if Russia cut off supply" .

Tina Fong

, a strategist at

, has gone further, sifting through more than 100 years of data to try to predict what these weeks' market moves might indicate for the economy.

Among her conclusions, she points out that "although we do not currently foresee a recession in the US, the risks are tilted towards one. Recessions do not necessarily follow a bear market, although the odds are not favorable if you look at history," she explains.

The S&P 500 index on Wall Street entered bearish territory several sessions ago, hence its appreciation.

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• Luis de Guindos