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- A stagflationary environment in the US and the Eurozone – Natixis
A stagflationary environment in the US and the Eurozone – Natixis
The disappearance of productivity gains has led to a stagflationary equilibrium of high inflation and low growth, economists at Natixis report.
Central banks do not know whether focus on fighting inflation or boosting growth
“We believe that the United States and the Eurozone will be characterised by a stagflationary equilibrium due to the lack of productivity gains.”
“The lack of productivity gains generates a sharp rise in unit labour costs, a sharp rise in employment and therefore significant pressure on the labour market, and a slowdown in potential growth. This type of stagflationary equilibrium puts central banks in difficulty, due to the appearance of a conflict between the objective of reducing inflation and the objective of stimulating activity. Both the Fed and the ECB are therefore reluctant to really fight inflation.”
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