According to the results of a UBS study issued on Wednesday, inflation has surfaced as one of the top concerns for Central Bank Reserve Managers, alongside a failure to resolve the COVID-19 crisis and rising debt levels.

Fears of inflation and uncontrolled hikes in long-term yields, which were not mentioned at all in last year’s Annual Reserve Manager Survey, were highlighted this year by 57 percent of respondents as a major threat to the global economy.

79 percent of respondents said they were concerned about not being able to stop the pandemic, while 71 percent said they were concerned about government debt levels.

Half of those polled believe COVID-19 will be eradicated only after 2022, indicating their concern about the virus’s seriousness.

Reserve managers from close to 30 global central banks responded to the survey, conducted during April and June.

“Inflation is back at the top of concerns for central bankers,” Massimiliano Castelli, UBS’s head of strategy and advice, global sovereign markets, told Reuters.

“The majority is saying they expect a rise, but not sort of moving to very high levels of inflation. So it seems there is a sort of view among the central banking community that the current rising inflation that we are experiencing is transitory.”

In terms of risks specifically related to the investment of FX reserves, the top concern, cited by 86% of respondents, remained lower and negative yields within fixed income.

More than two-thirds of participants expect the U.S. Federal Reserve to raise interest rates in 2023, while 30% expect the Fed to do so in 2022.

In contrast, participants expect a later hiking cycle for the European Central Bank, with 33% expecting the first interest rate increase in 2023, 41% in 2024 and only 26% later than 2024.

When asked how far major central banks would go to assist markets and the economy if necessary, 58 percent believe the Fed would use yield curve control.

According to the report, the trend toward increasing diversification of reserves across asset classes has maintained. Over 40% of central banks consider equities to be an eligible asset class, while 54% of respondents consider emerging market debt to be an eligible asset class, with a trend toward more inflation-protecting assets.

In the next three years, nearly 40% of respondents expect wholesale Central Bank Digital currencies to be issued.