Business leaders left in limbo by rate hike impact lag

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An unusually long lag in the time interest rate hikes are taking to feed through to the economy has left corporate leaders guessing whether to prepare for a hard or soft landing.

Although central banks in the United States and Europe have raised interest rates at the fastest pace in decades in an effort to tame inflation, most economies have so far escaped the painful recessions triggered by previous tightening cycles.

"The fact everyone is asking the question is interesting, there are those who are optimistic and others who are pessimistic," he added. The ECB raised interest rates to their highest level in 22 years last month and promised another hike this month, with possibly another in September. Additionally, labour markets are strong on both sides of the Atlantic and corporate profits have so far held up, while housing markets are generally cooling but not in a tailspin.

"I see quite a bit of optimism in the short term, but I see a lot of downside risks if there is a policy mistake, especially from the central banks," she added. "We can expect debt levels to be adjusted on a case by case basis without triggering a systemic crisis," said Barneix, who is also deputy finance director at French building materials group Saint-Gobain.

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