Report
Patrick Artus

Is there still hope that inflation will disappear on its own?

Evidently, c entral banks still harbour hope that inflation will disappear on its own, as they do not currently envisage raising interest rates to a level that would have a significant impact on inflation. Is this hope of inflation disappearing spontaneously reasonable? We do not believe so , for the following reasons: If inflation remains high for long enough, wages will re-index to prices; The initial causes of inflation (shift in the structure of demand, sanctions against Russia, effects of the energy transition) are long-lasting; Demand for commodities is currently weakened by the COVID wave in China. After this wave, the Chinese authorities will stimulate the economy strongly to try to achieve their growth targets; Commodity producers have learned to extract monopoly rents. If it turns out that inflation does not disappear on its own, central banks will be forced to act much more vigorously .
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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