Report
We should not confuse nominal and real interest rates
Since the end of 2021, nominal long-term interest rates have risen in the United States and the euro zone, due to rising inflation and expected inflation, and central banks’ announcements that they are moving to a less expansionary monetary policy. This development has led to a decline in equity markets and a question about the risk of a sharp downward correction in equity or real estate markets. But we should be careful not to confuse nominal and real interest rates: while nominal long-term interest rates are rising, they are rising less than inflation and real long-term interest rates are continuing to fall: there is therefore no reason why equity markets should fall. Let us remember that it is real, not nominal, interest rates that have an impact on demand for goods and services, asset prices and the debt ratio dynamics.
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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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