Report
Patrick Artus

How did central banks respond to stagflation in the past?

The United States and the euro zone will be in stagflation in 2022: rising inflation (due to commodity prices, rising corporate profit margins and wages in the United States), loss of growth (due to the decline in real wages, energy and commodity supply problems, the reduction in the fiscal deficit in the United States). How will the two central banks react to this stagflation situation? To try to find out, we look at how they responded to stagflation in the past (in the United States, 1974- 19 75, 1978- 19 82, 1988-1990, 2007-2008, in the euro zone 1974- 19 85, 1990- 19 94, 2007, 2011-2012). We see that interest rates have always risen in a stagflationary situation, except in late 2011 and 2012 in the euro zone, when perhaps the central bank reacted less to inflation and more to the loss of growth than in the United States.
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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