Real interest rates are going to be incredibly negative

The war in Ukraine leads to both: An initial fall in long-term interest rates as risk aversion increases and monetary policy tightening is postponed, particularly in Europe; A rise in inflation, due to the rise in commodity prices, which we estimate at 1.2 percentage point in the United States, 2.4 percentage points in the euro zone and 1.3 percentage point in the United Kingdom. Real long-term interest rates will therefore be incredibly negative, which will boost demand for goods and services, financial markets and public finances at a time when they are being hit by: The decline in real wages; The need to support households and companies in difficulty through public transfer payments ; The breakdown of economic relations with Russia.