(Bloomberg) — Central banks haven’t acted quickly enough to counter rising inflation, Axel Weber, the outgoing chairman of UBS Group AG, said, adding that he expects Europe and Switzerland to eventually move to increase their historically low interest rates.
“I’ve been talking about uncomfortably high inflation rates for over a year,” Weber told Neue Zürcher Zeitung in an interview published Saturday. “The central banks have largely ignored this in the hope that the issue will resolve itself.”
He cautioned, however, against taking “such massive countermeasures now that the economy is completely choked off and financial stability problems arise.”
Last month, Euro-zone inflation reached an all-time high following Russia’s invasion of Ukraine. March consumer prices surged 7.5% from a year ago, versus 5.9% in February and more than the 6.7% median estimate in a Bloomberg survey.
In a worst case scenario, the world economy could soon resemble the 1970s with an energy crisis, massive price increases for raw materials and geopolitical conflict akin to that during the Cold War, he said.
The Ukraine war and the west’s sanctions against Russia won’t end globalization, but will likely mark the beginning of a new era where security policy becomes a more important factor for governments and companies, Weber said.
Energy security will displace the decarbonization transition in the short term, and governments will bolster their defense investments, Weber told NZZ. For citizens, this means higher energy costs and an increasing tax burden.
Weber said UBS is not accepting any new business with Russian-based customers and its current non-sanctioned Russian clients with assets that exceed 100,000 CHF ($108,000) are subject to reporting obligations.
Russia is not a core market for UBS, Weber said, and the company’s focus will be concentrated on the US and China in the years to come.
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