Report
Once central banks give the message that they will be ultra-expansionary (very dovish), they are forced to actually be so due to financial market expectations
The Federal Reserve and the ECB have done nothing to avoid being perceived as ultra-expansionary (ultra-dovish). This leaves them with no choice other than to actually be so. Because financial markets expect sharp interest rate cuts, long-term interest rates would rise sharply and share prices would tumble if these sharp cuts did not actually eventuate. By not daring to say that there were limits to their ultra-expansionary behaviour, the central banks can now no longer set such limits.
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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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