Report
Patrick Artus

OECD countries: If inflation does not return and interest rates remain low, could there be a crisis (a recession)?

Will the very low interest rates made possible by the absence of inflation in OECD countries stave off a crisis or recession for good? We assume that both inflation and interest rates remain low for a long time. In the short term, there will not be any crisis or a recession, since the low interest rates maintain the solvency of all economic agents, even those with a high debt ratio; But in the long term, sustained low interest rates (the refusal to “lean against the wind”) could lead to a crisis if there are asset price bubbles that burst not because of a rise in interest rates but simply because of the size of the bubble. Very low interest rates may therefore protect against a crisis in the short term but cause one in the long term.
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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