Report
The key question for financial markets and economies going forward: Could inflation return?
The absence of inflation has allow ed monetary policy in OECD countries to be highly expansionary, leading to very high debt ratios, rising wealth and periodic asset price bubbles. An unexpected return of inflation would have destructive effects: rise in interest rates, contraction in liquidity, loss of borrower solvency, fall in asset prices. What structural mechanisms could cause inflation to return in OECD countries? Population ageing, which normally gives rise to excess demand for goods and services; A correction of the skewing of income distribution against wage earners , once the rejection of “neoliberal” capitalism shifts the balance of power between wage earners and employers; An acceleration of the energy transition, leading to the shift to more expensive energy sources and to a fall in the supply of goods and services as capital is destroyed ; Deglobalisation, as the return to regional value chains no longer harnesses emerging countries’ low production costs.
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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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