The euro zone’s policy mix is expansionary: The current economic policy is increasing inflation in the zone
The US policy mix is clearly restrictive (very sharp reduction in the fiscal deficit, fairly rapid rise in interest rates), and we should expect a recession and a fall in inflation in the United States. On the contrary, the euro-zone policy mix is expansionary: stability of the fiscal deficit at a high level; a small rise in interest rates with real interest rates remaining negative; as a result, depreciation of the euro's exchange rate. The economic policy conducted in the euro zone is therefore now increasing inflation. Is this sustainable given the ECB’s mandate or should we understand that this mandate has changed?
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.