Report
Why was the euro zone’s inflation target set at 2%?
A rational explanation of the fact that the euro zone’s inflation target was set at 2%, in addition to the fact that this target appeared achievable, is based on differences in productivity gains and inflation between services and industry. In the euro zone, industry traditionally had about 2% higher productivity gains than in services, and, with similar wage increases, inflation was 2% lower than in services. To avoid deflation in industry (due to negative industrial inflation), it was therefore necessary to set the overall inflation target at around 2%. Since 2020, there has been no inflation gap between industry and services. The fact that the inflation target is 2% can no longer be explained by the need to prevent deflation (a fall in the price level) in industry.
Provider
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.
Other Reports from Natixis
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.