No one currently sees the European Central Bank (ECB) abruptly exiting its expansionary monetary policy. But some observers are starting to talk about an abrupt move by the Federal Reserve. But analysts at Natixis do not believe at all in this scenario of an abrupt tightening of US monetary policy. 

A cautious Fed should remain the scenario

“It is out of the question that the ECB will abruptly shift to a more restrictive monetary policy. But some observers are arguing that the Fed could do so, given the momentum of inflation in the US. We believe there is no chance also of the Fed abruptly switching to a more restrictive monetary policy, given the levels of debt ratios and asset prices.”

“The central scenario remains a scenario of cautious monetary policy adjustment by the Fed, leading to a slow rise in long-term interest rates and to continued negative real long-term interest rates.”