Report
Patrick Artus

A more restrictive monetary policy at the wrong time?

Several central banks (in particular the Federal Reserve and the Bank of England, but not the ECB) are preparing to switch to a less expansionary monetary policy from late 2021 or early 2022. The appropriateness of this choice is questionable, given the risks to growth from various causes: The shift to markedly lower fiscal deficits than in 2021: should both monetary and fiscal policy be made more restrictive? The slowdown in growth due to the spread of the delta variant of COVID in low-vaccinated countries (emerging countries, United States), the resulting fall in share prices and therefore in wealth effects (reinforced by the policies conducted in China), and the resulting fall in commodity prices; The decline in real wages due to the surge in inflation in 2021. It is understandable that some central banks are concerned about inflationary risks and the risks of financial instability, but the timing of the monetary policy tightening may also be a concern.
Provider
Natixis
Natixis

Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.

 

Analysts
Patrick Artus

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