EUROZONE: INFLATION WILL BE HIGHER IN THE FUTURE THAN THE 2.2% AVERAGE BETWEEN 2002 AND 2007 – NATIXIS
Inflation in the Eurozone will be higher in the future than between 2002 and 2007 – when averaged 2.2%, analysts at Natixis say.
Medium-term inflation will determine the level of nominal and real interest rates
Average inflation in the Eurozone over the 2002-2007 period was 2.2%. We have seen the factors that will give rise to higher inflation in the future than between 2002 and 2007: higher energy prices, a tighter labour market, declining productivity gains, and a dominant regime of excess demand, whereas the dominant regime from 2002 to 2007 was excess supply.
If inflation is higher in the medium term than 2.2% (2.7%, 3%), we can expect both short-term and long-term interest rates to be higher than between 2002 and 2007.
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