Report
Is the ECB steering inflation expectations?
The ECB is currently trying to restore inflation expectations in the euro zone, mainly through forward guidance: by stating that it will leave interest rates at a very low level as long as inflation is lower than the target , and by insisting that it can make monetary policy even more expansionary. But do the ECB’s decisions and announcements have an effect on expected inflation in the euro zone? When we try to explain expected inflation by the 2-year euro interest rate (which represents the expected short-term interest rate), by the euro zone’s monetary base, and by past, actual inflation in the euro zone, we see no significant effect of the interest rate or the monetary base on expected inflation. Monetary policy does not seem to have any significant effect on expected inflation.
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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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