In the face of widespread criticism suggesting that the European Central Bank (ECB) has overly increased interest rates, economists at Natixis are presenting a dissenting viewpoint. Contrary to the belief that these rate hikes have led to stagnation in the Eurozone throughout 2023 and potentially into 2024, Natixis argues against this notion, citing several factors.
According to Natixis economists, the prevailing unemployment rate in the Eurozone is currently at its lowest, indicating that the ECB’s monetary policy adjustments have not resulted in a rise in unemployment. Additionally, they contend that there is still evident excess demand for goods and a notable challenge in hiring for various sectors.
Natixis rejects the assertion that the ECB’s restrictive monetary policy has been detrimental enough to cause an increase in unemployment or create a deficit in aggregate demand for goods and services. Contrary to this view, they anticipate that inflation will persist above the 2% target. Consequently, Natixis maintains the position that the ECB has not escalated interest rates excessively.
The nuanced perspective from Natixis challenges the prevailing narrative surrounding the ECB’s monetary policy decisions, emphasizing the importance of considering low unemployment rates and persistent demand for goods when evaluating the overall impact of interest rate adjustments.
