Report
Economies’ sensitivity to interest rates has increased considerably
When a central bank raises interest rates, it makes a trade-off between the gain in well-being that results from a fall in inflation (if it is higher than the inflation target) and the loss of well-being that results from the decline in activity. Over time, however, real economies in OECD countries have become increasingly sensitive to interest rates, due to: Rising debt ratios; Rising asset prices and the size of wealth, and therefore wealth effects; Increasing use of debt leverage by companies; The well-established expectation that long-term interest rates will not rise. While the cost in terms of activity of raising interest rates has thus increased significantly, central banks react much less to rising inflation than they did in the past.
Provider
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.
Patrick Artus
Other Reports from Natixis
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.