"European Central Bank warns of bubbles in property and financial markets"

" \n European Central Bank warns of bubbles in property and financial markets \n \n\n \n The European Central Bank warned of stretched valuations in many asset markets, as the region continues to recover from the coronavirus pandemic on the back of ultra-low interest rates and massive stimulus measures. \n \n\n \n In its biannual stability report on Wednesday , the euro zone\u2019s central bank mentioned vulnerabilities in property and financial markets, adding that \u201crisk-taking by non-banks and elevated sovereign and corporate debt are building up.\u201d \n \n\n \n On property, it said risks of price corrections over the medium term have increased substantially amid rising estimates of house price overvaluations. \n \n\n \n \u201cIn particular, households with variable rate mortgages or shorter fixed-rate periods on their mortgages are exposed to an unexpected rise in interest rates, which could adversely affect their ability to service their debt,\u201d the report said. \n \n\n \n Luis de Guindos, the vice president of the ECB, also highlighted a \u201cstriking buoyancy\u201d for equity and risky asset markets, \u201cmaking them more susceptible to corrections.\u201d \n \n\n \n \u201cThere have been examples of established market players exploring more novel and more exotic investments. In parallel, euro area housing markets have expanded rapidly, with little indication that lending standards are tightening in response,\u201d he said in the report. \n \n\n \n Also: Bank of Africa Ghana reduces NPLs by 7.25% YoY \n \n\n \n ECB buying slows \n \n\n \n The central bank announced in September it would be buying fewer bonds off the back of surging consumer prices. This began the process of slowly winding down its huge pandemic-era stimulus package. \n \n\n \n Inflation in the euro zone hit 3.4% in September, representing a 13-year high. Inflation then hit another 13-year high in October, at 4.1%, as the currency bloc battled surging energy costs. \n \n\n \n In September, ECB President Christine Lagarde made it clear that the central bank\u2019s actions were a recalibration, but not a tapering. This is because the ECB is of the view that higher inflation is temporary and will fade throughout 2022. \n \n\n \n Some market participants believe the ECB is underestimating inflationary pressures and will therefore likely have to announce a rate hike before the start of 2023. Indeed, money markets have priced in the probability of a 20-basis point hike for December 2022. \n "

"European Central Bank warns of bubbles in property and financial markets"

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