Report
Will the cost of the monetary policy response to the crisis be volatility?
The central banks in the United States and the euro zone will monetise the massive fiscal deficits run up during the coronavirus crisis. We therefore seek to identify what type of costs this considerable increase in money supply will give rise to: In today's economies, it's no longer inflation and the inflationary tax; But it is rather volatility of financial asset prices and exchange rates: excess liquidity generates large and erratic buying and selling flows of different financial assets and currencies, a development already seen after the 2008-2009 crisis. Volatility is indeed a cost: a high variability of asset prices, wealth and exchange rates reduces well-being and is a hindrance to investment and global trade.
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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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