«

»

Natixis’ Artus proclaims expansionary monetary policy as the bête noire of Europe’s economy

In a recent IFR article, Natixis’ Chief Economist Patrick Artus argues that despite QE being hailed as a panacea for economic health, it is only for the benefit of the financial markets. Indeed, it is because of bond holders – such as institutional investors and banks – that monetary policies will remain expansionary for a long time, despite the little aid it will provide for Europe’s inflationary issues or its low growth.

Serving to benefit the region’s bondholders, a loosening in monetary policy would lead to a rise in interest rates would lead to massive capital losses for the bondholders – a result the central banks cannot accept. As in Japan, the ECB must therefore conduct monetary policies that keep long-term interest rates low to avoid a financial crisis unravelling, even if it provides little benefit to Europe’s overall economy.

Certainly, expansionary monetary policy could prove to be the bête noire of Europe’s economy.

To read the whole article, please click here.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>