Report
Has there already been a rise in expected inflation in financial markets that has not been followed by an actual rise in inflation?
In the United States, expected inflation is now rising markedly in financial markets, linked to the announcement of strong fiscal support for the economy. But the degree of underemployment in the US economy remains very significant and seems to rule out a rapid upswing in core inflation. We therefore seek to determine whether there has ever been a rise in expected inflation in US financial markets that was either an error or that was not followed by a similar rise in actual inflation. Indeed, both for expected inflation in financial markets and for inflation expected by households we see that: It often overestimates actual inflation and overreacts; And then it corrects and falls back towards the level of actual inflation. This is again the case in 2021.
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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
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