Report
Patrick Artus

Are the ECB and the Bank of Japan the only central banks not to end their expansionary monetary policy?

The euro zone and Japan have a characteristic that neither the United States nor the United Kingdom has : despite the highly expansionary monetary policies, core inflation remains very low. This suggests that the ECB and the Bank of Japan will maintain an expansionary monetary policy for a long time while the Federal Reserve and the Bank of England will exit this policy. This is an important change: today, all the major central banks are conducting a highly expansionary monetary policy, and there can be no “flight from money”: savers have no incentive to switch from one currency to another. But what happens if this homogeneity of monetary policies disappears? If it is for a short period of time, a temporary depreciation of the euro and the yen against the dollar, then a renewed appreciation with the negative impact on the dollar’s exchange rate from the United States’ structural external deficit. But if it is for a long period of time, a more drastic process can be triggered with significant capital outflows from the euro zone and Japan.
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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