How can we explain the changes in central banks’ behaviour?
It is clear that central banks’ behaviour (we look at the Federal Reserve and the ECB) no longer is the same as in the past, and that they choose to keep interest rates markedly lower than what they would have done under the same conditions in the past. How can we explain this change in behaviour? Is it because : Debt ratios are very high, especially public debt ratios, and because a rise in interest rates could trigger a debt crisis? The fact that inflation remains lower than the inflation target and that there is a major non-linearity in the behaviour of central banks, which actively stimulate activity as long as inflation is lower than the target? Following the 2008-2009 crisis, central banks have developed a very high aversion to the risk of a recession (given its effects on banks and its political effects) and therefore want to stimulate demand more than in the past? Central banks believe that the global economy still has a deflationary bias? The central bank reacts to a fiscal policy that is too restrictive ( i n the euro zone, but not in the United States)?