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Interest rates to remain low until mid-2004 Back  
Four months ago, a survey of Irish financial services economists by Finance produced the clear conclusion that interest rates in the Eurozone, the US and the UK were on their way up, but, current data suggests that the increase may not happen just yet.
In this issue of Finance, the same panel plus some additional contributors broadly reiterate this view, although there are some quite dramatic differences in opinion on the scale of the likely increase in rates. And just as in last May’s survey, there is the contrary opinion of Davy’s Donal O’Mahony, whose bearish views on the global economy and his forecast of falling interest rates puts him in conflict with his peers.

And as in May, Bank of Ireland’s Dan McLaughlin remains the arch-bull and his benign view of the global economies means that he believes that interest rates in all three regions will rise sharply in 2004 with both ECB and Federal Reserve rates reaching 4 per cent and the Bank of England base rate rising to 4.75 per cent. In between those two extremes lie the forecasts from our other contributors.

But while last May’s survey was largely confined to views on interest rates and hedging, on this occasion Finance has extended the survey to include forecasts on how the major stock markets will perform this year and next, where bond yields are heading and how the euro will perform against sterling, the dollar and the yen.

And just as there widely differing forecasts on the direction of interest rates, our panel produced equally differing forecasts for the future performance of the Dublin, London, New York and NASDAQ stock market, US and German bond yields and how the euro’s value will change against three major currencies.

Our panel of contributors in addition to Donal O’Mahony of Davy and Dan McLaughlin of Bank of Ireland comprised: Enda Coll, Anglo Irish Bank; Niall Dunne, Ulster Bank Financial Markets; Noel Griffin, Bank of Scotland (Ireland); Austin Hughes, IIB Bank; Colin Hunt, Goodbody Stockbrokers; Eugene Kiernan, Irish Life Investment Managers; Alan McQuaid, Bloxham Stockbrokers; Oliver Mangan, AIB Group Treasury; Dermot O’Brien, NCB Stockbrokers and Jim Power, Friends First.

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