Regulator warns of financial market instability despite strong economic outlook
NL TimesDespite a positive economic forecast, the Netherlands’ Authority for the Financial Markets has cautioned that stability in financial markets could quickly shift, with vulnerable populations at increased risk in times of economic uncertainty. The AFM noted that Dutch households have displayed resilience in response to rising inflation and interest rates, a trend supported by government aid during the COVID-19 pandemic and recent energy crises, along with steady wage growth, a tight labor market, and a preference for long-term fixed mortgage rates. While inflation has moderated somewhat, AFM’s forecast indicates that economic growth will remain slow, pointing to a broader cooling last year due to high food and energy costs. Persistent inflation above the European Central Bank’s target may delay rate cuts, while geopolitical developments could also unsettle financial markets.
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