Central banks talk about normalising their monetary policies in the future: Are they credible?

Investors understand from the statements made by the Federal Reserve and the ECB that there will be a normalisation of monetary policies, probably with a stabilisation of the size of the central bank balance sheet in 2022 and the beginning of short-term interest rate hikes in 2023. But is this monetary policy normalisation credible? First, it has to be synchronised between the United States and the euro zone if sharp fluctuations in the dollar/euro exchange rate are to be avoided; Second, given the very high level of public debt and the fact that public spending needs will remain high, any rise in long-term interest rates to within the vicinity of nominal potential growth rates would be dangerous; the case of Italy in the euro zone is particularly glaring ; Third, there is a risk of a sharp downturn in housing investment if interest rates on mortgage loans converge towards per capita wage growth; Fourth, the central banks are determined to get the participation rate back to at least its pre-COVID crisis level, which will take time; Fifth, the central banks are likely to steer clear of doing anything that might cause share prices to fall, and share prices are highly sensitive to the monetary policy outlook.