Report
The expansionary bias of monetary policies has not disappeared
In the late 1990s, central banks allowed the dot-com stock market bubble to emerge; from 2002 to 2008, they allowed a real estate bubble to develop. In each case, the subsequent bursting of the bubble triggered an economic and financial crisis. Today, central banks and monetary policies still have an expansionary bias. They will use the fall in inflation, although core inflation remains well above 2%, to lower their interest rates. They let a large part of the money created during the COVID crisis persist. The result will be even stronger growth in the stock market bubble than today, which ultimately will trigger another financial crisis. In reality, on the one hand, central banks have an expansionary bias and, on the other, it is increasingly difficult to have both price stability for goods and services and asset price stability as the monetary policy objective.
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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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