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If euro-zone inflation remains permanently around 1%, changing to a nominal growth target would solve the problems
Despite the return to full employment, core inflation in the euro zone currently remains close to 1%. If , as a result of the functioning of labour and goods and services markets , euro-zone inflation permanently remains close to 1%, the ECB will have to change its monetary policy objective. Changing to a nominal growth objective would solve all problems, as it would: Make it possible to conduct monetary policy in the economic cycle; Regulate debt and asset prices; Provide monetary policy space at the end of an expansion period; Make it possible to not respond to a rise in the oil price.
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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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