Market news
15.03.2022, 13:05

More restrictive monetary policy would be legitimate in the US, but not in the eurozone – Natixis

Analysts at Natixis seek to determine in what cases (for what origins of inflation) the central bank is justified in fighting inflation. They then seek to identify what this means for current monetary policy in the United States and the eurozone, especially after the sharp rise in commodity prices caused by the war in Ukraine.

What type of inflation should monetary policy respond to?

“Inflation is caused by: In the US, the decline in labour supply; insufficient production capacity for oil, metals, transport and semiconductors; rising profit margins; In the eurozone, only insufficient production capacity for commodities, transport and semiconductors; In both countries/regions, currently the war in Ukraine, ultimately the energy transition.”

“We see that the only valid reason for switching to a more restrictive monetary policy is the rise in profit margins in the US.”

 

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