<\/p>\n
\n Share:<\/span><\/p>\n Patrick Artus of Natixis is out with a flash note regarding complications for the European Central Bank (ECB) as the central bank looks ahead to a looming confidence crisis.<\/p>\n If we measure a central bank’s credibility on the basis of long-term inflation expectations, we see that the ECB’s credibility has been declining since the start of 2021, while the Federal Reserve’s credibility has remained stable.<\/p>\n If the ECB’s credibility declines while that of the Federal Reserve remains stable, we would expect:\u00a0<\/p>\n If we measure a central bank’s credibility by the level of long-term expected inflation, and if we take 5-year inflation swaps inm 5 years or in 10 years as an indicator of long-term expected inflation, we see that since the beginning of 2021 the ECB’s credilibity has fallen sharply… (and) the Federal Reserve’s credibility has remained stable.<\/p>\n If a central bank loses some of its credibility, we would expect: a depreciation of the exchange rate of its currency combined with capital outflows… (and) higher inflation, since the long-term expected inflation is higher.<\/p>\n This depreciation of the euro against the dollar is indeed the result of the eurozone begin less attractive than the United States for international capital.<\/p>\n The pace of disinflation is significantly higher in the United States than in the eurozone, part of which can be attributed to the gap between trends in long-term expected inflation.<\/p>\n<\/blockquote><\/div>\n","protected":false},"excerpt":{"rendered":" Share: Patrick Artus of Natixis is out with a flash note regarding complications for the European Central Bank (ECB) as the central bank looks ahead to a looming confidence crisis. What are the consequences of the ECB’s loss of credibility? If we measure a central bank’s credibility on the basis of long-term inflation expectations, we […]<\/p>\n","protected":false},"author":2,"featured_media":174298,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[173],"tags":[299,201,248,251,246,257,825,747,255,250,252,247,253,249,256,254],"class_list":["post-174297","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-others","tag-banks","tag-blockchain","tag-bsc","tag-chainlink","tag-coin","tag-cryptocurrency","tag-ecb","tag-europe","tag-gta","tag-looks-rare","tag-oracle","tag-polygon","tag-quickswap","tag-safe-moon","tag-wallet","tag-wordpress"],"_links":{"self":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/174297","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/comments?post=174297"}],"version-history":[{"count":1,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/174297\/revisions"}],"predecessor-version":[{"id":174299,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/174297\/revisions\/174299"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/media\/174298"}],"wp:attachment":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/media?parent=174297"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/categories?post=174297"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/tags?post=174297"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}What are the consequences of the ECB’s loss of credibility?<\/h2>\n
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