The European Central Bank (ECB) is likely to hold interest rates in the short term but hike them next year, according to Derek Moore, head of investments with Ulster Bank. Speaking today to the Institute of Certified Public Accountants, Moore said, "Inflation is expected to increase and the indications are that the ECB will hold interest rates steady in the short-term. However, I expect a rise in rates in the middle of next year". For investors, this means that global equity markets can be expected to strengthen in 2004, on the back of a global economic recovery led by the US, he said.
"My view is that investors will return to the equity market as bond yields are hovering at historically low levels," Moore added. However, Moore tipped Japanese markets to outperform both the US and eurozone. "The Japanese stock market is close to it's high for the year and I expect that Japanese equities are likely to be the star performers in 2004," he said. He also said that promising signs have emerged that the global economic recovery has started, although the eurozone will continue to lag the US. //www.fxcentre.com