Report
Patrick Artus

What accounts for the different stances of the US and euro-zone central banks?

In the United States, even though fiscal policy is much more restrictive in 2022 than in the euro zone, monetary policy for the time being is also more restrictive than in the euro zone. What accounts for this difference in the central banks’ stances? Because policies to support household purchasing power are not very developed in the United States, unlike in the euro zone, inflation must be reduced rapidly to avoid purchasing power losses; The fact that competition is weak in the United States, unlike in the euro zone, so as soon as there is inflation in the United States, companies’ profit margins become high, which drives inflation higher; The Federal Reserve is also of course less reluctant to drive up unemployment to fight inflation than the ECB. This difference between the two central banks is well known, but the differences resulting from social welfare and competition policies are less so.
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.

 

Analysts
Patrick Artus

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