Report
Will we eventually get out of inflation targeting?
Since the 1980s, central banks have been targeting inflation ( have had a future inflation target). But this choice may become difficult to maintain: Inflation could return, due to population ageing, the energy transition, reshoring and population ageing in China. If inflation targeting is maintained, real interest rates should then rise (nominal interest rates rise more than inflation); But economies need very low real interest rates: to ensure the sustainability of public debt, so that the investments needed for the energy transition and whose financial return is low can be made. The only solution would then be for central banks to abandon inflation targeting and move to a goal of keeping long-term interest rates low, like the Bank of Japan.
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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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