A survey of central bank reserve managers and sovereign wealth fund managers finds that they seemingly have a different take on the future for interest rates than the markets.

UBS Ltd. hosted its annual gathering of central bank reserve managers and sovereign wealth funds last week. Surveying the more than 70 institutions with collective assets under management in excess of US$5 trillion that attended the meeting, it found that 84% believe that the U.S. federal funds rate will be at or below its current level by year end, “in clear contrast to the latest shift in market expectations”.

Alternatively, 62% see higher rates in Europe, as they believe the ECB repo rate will be at or above its current level by year end.

Separately, UBS Ltd. says that global growth is facing an increasingly tenuous outlook, yet inflation is building.

The firm says its analysis reveals that global industrial production growth has slowed sharply and, is now below its long-term trend for the first time in nearly four years. It adds that the slowdown is likely to continue given that inventory levels in global manufacturing appear excessive relative to final demand.