Report
Patrick Artus

Will the ECB and the Federal Reserve be able to stop the yield curve from steepening in the future?

The Bank of Japan has moved to a policy of controlling long-term interest rates (with a target 10-year interest rate of 0%). Could the ECB or the Federal Reserve adopt the same policy in the future to prevent a steepening of the yield curve and a deterioration in borrower solvency? This raises two questions: Will inflation return in the euro zone or the United States, for example on the back of the rise in production costs due to the new health regulations? How high is average inflation in the United States and the euro zone compared with that in Japan? How would investors in the euro zone and the United States behave compared with those in Japan if long-term interest rates were very low relative to inflation and nominal growth? Would they hold onto their bonds? Or would the ECB and the Federal Reserve have to buy a huge bond portfolio?
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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