Report
It is much simpler for the Federal Reserve than for the ECB to normalise its monetary policy
The coronavirus crisis, like crises of the past, will prompt the Federal Reserve and the ECB to conduct a very expansionary monetary policy. But what will happen once the crisis is over? It is then much easier for the Federal Reserve than for the ECB to normalise its monetary policy and to exit the very expansionary monetary policy. This is because: The Federal Reserve does not have to worry about the United States’ fiscal solvency or the financing of the US public debt, given the strong international demand for this debt, especially in times of uncertainty; On the contrary, one of the ECB's objectives is to maintain euro-zone countries’ fiscal solvency, as their public finance situation has been worsened by the crisis which has forced it - as we have seen over the past 10 years - to keep interest rates very low after the crisis.
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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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