The Master Trust Bank of Japan, Ltd.

Central Banks Likely to Raise Interest Rates

The article argues that persistent inflationary pressures make further interest-rate hikes by major central banks likely, with the ECB possibly raising rates to around 2.25% at its next meeting. It cites multiple drivers beyond oil — higher prices for inputs such as kerosene, gas, naphtha, helium and fertilisers, supply‑side damage from conflict in the Middle East, and second‑round effects from weak productivity in Europe. The piece highlights a large AI investment cycle: Amazon, Alphabet, Meta and Microsoft are expected to spend roughly $700–725 billion in CAPEX for 2026, boosting demand for data centres, chips and power and adding upward price pressure. The author favors equities over long-duration bonds given higher nominal growth and warns that the Fed and some other central banks may remain too loose. The US economy’s robustness and electrification/AI-driven commodity demand (copper, silver, uranium) are also emphasised.