ECB will have to decide whether to accept high core inflation or a more restrictive monetary policy – Natixis
…
This is a premium post.
[s2If !current_user_can(access_s2member_level4)]Please register for PREMIUM VERSION HERE to read full post below containing analysis. In case of any error or you think you are not able to read the full post below, please email us at support#nehcap.com [lwa][/s2If] [s2If current_user_can(access_s2member_level4)]
“Core inflation in the eurozone continues to rise, reaching 6% year-on-year in August 2022. Its acceleration is inevitable. The European Central Bank (ECB) will therefore have to decide whether to tolerate core inflation remaining high into 2024 or switch to a far more restrictive monetary policy than is currently expected, analysts at Natixis report.
“The ECB can no longer claim that core inflation will rapidly subside, because of its inertia. If core inflation is higher than 6% in early 2023, the inertia of this inflation forces will lead it to at least around 6% at least in early 2024.”
“Econometric analysis shows that core inflation is perfectly inert (core inflation has an eigenvalue of 0.98). The ECB will therefore have to accept: Either core inflation of around 6% at least in 2024; Or a more restrictive monetary policy than is currently expected.”
[/s2If]
Join Our Telegram Group
