Report
Patrick Artus

What could replace inflation targeting if there is no longer any inflation?

Let us make the (perhaps debatable) assumption that inflation has disappeared, due to the modern functioning of the labour market, competition, domestic and between countries, and digitisation. What then should central banks replace inflation targeting with? The choice made currently, with different methods (average inflation targeting, yield curve control, spread control) seems to be to maintain an expansionary monetary policy forever; but this choice is too dangerous: it will generate a surge in the quantity of money and in asset prices; Rather, there must be a return to the foundations of monetary policy, the objective of which must be to provide the economy with the optimal quantity of liquidity , neither too little nor too much, corresponding to the needs of economic agents.
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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