Report
Should a central bank be forward-looking?
The question is now being raised again by the coronavirus crisis: should the Federal Reserve and the ECB act before the loss of growth shows up in the data in the United States and the euro zone? In early March 2020, the Federal Reserve answered this question in the affirmative. But some commentators argue the opposite: monetary policy space should be reserved to be use d in the event the situation becomes serious. In reality, monetary policy (whether interest rate cuts or liquidity injections) takes time to have an effect on the economy (three to eight quarters). If a central bank knows that growth is going to fall in the future, it must therefore act immediately, before the signs of this fall become visible.
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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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