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28.10.2022, 06:47

Everything points to higher interest rates in the eurozone than in the US – Natixis

To achieve the same disinflation as the Federal Reserve, the European Central Bank (ECB) would have to raise interest rates much more than the Fed, in the opinion of analysts at Natixis.

Five reasons to expect higher interest rates in the eurozone than in the US

“Higher headline (and, in the future, core) inflation in the eurozone ; the high level of core inflation shows that eurozone inflation is endogenous and no longer linked only to commodity prices.”

“Stronger wage growth in the eurozone than in the United States, due to greater pressure on the labour market.”

“Much higher energy prices in the eurozone than in the United States, a consequence of the war in Ukraine.” 

“A much greater rise in import prices in the eurozone than in the United States, in particular, due to the depreciation of the euro.”

“A far more expansionary fiscal policy in the eurozone than in the United States, thanks to spending to boost purchasing power.”

 

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