CEO of UBS, Sergio Ermotti
Sergio Ermotti was a trader who rose to the top of UBS. He sat down for an interview with Bloomberg, was asked about everything and was generally open. One question was about monetary policy.
BM - We'll soon move out of a unique period of monetary policy. How worried are you about the effects of that?
SE - I'm very worried. Not that I expect anyone to know the answer to everything, but I don't think that anyone, even at the central banks, has a clue how to get out of this or what the repercussions of this monetary policy will be. We can all try to mitigate, but nobody knows the consequences. People can hope.
He also touches on forward guidance and how useless it is, saying they never take it for granted.
"The central bank says it won't move rates for at least three years. But maybe in two months someone changes his mind. What would the repercussions be?," he asks.
Ermotti also said central bankers and policy makers are being stubborn because they're afraid of political blowback.
"I think politicians and regulators did a good job of addressing the financial crisis. They did many things correctly, but they also made some mistakes. That's only human. But now, because they're so concerned of being accused of making mistakes, the danger is they don't address them, that they become hostage to themselves. It's easy to think, Oh, my God, I made a mistake. Well, yes, you made a mistake. But you also made 10 right decisions. Whether you're in business or politics, you need to recognize you made a mistake and then do something to fix it. It's impossible to do everything right."
Finally, on China he isn't worried at all.
"You look at how the Chinese economy has been developing in the last 20 years and whatever it's going to go through is an adjustment. They are able with their own means to get through it. Is this them potentially slowing down for a couple of years? Maybe, yes, but long-term we would expect China to grow 4, 5, maybe 6 percent or whatever and still double its economy in 10 or 20 years, depending on the average growth and financial markets."
