Report
The list of reasons likely to stop central banks from sharply raising interest rates
Even though central banks now face high inflation, several serious factors are curbing their ability or willingness to raise interest rates: Of course, the need to avoid a debt crisis; Of course also, the desire to support employment, investment and potential growth; But also the fact that a restrictive monetary policy is ineffective at taming inflation if the inflation results from a negative supply shock (commodities, transport, energy, labour market, etc.); The risk of a collapse in equity markets if interest rates have to rise sharply to have a visible effect on inflation; And finally, the fact that if nominal wages are under - indexed to inflation, the increase in inflation already drives down real wages and curbs demand, without monetary policy having to do so.
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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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