Two Sides of the Same Sparkly Coin?. Disinflation and Financial Market Jitters amid Monetary Tightening
Studien, European Parliament, Luxembourg, Juni 2023, 23 Seiten,
Auftraggeber: Europäisches Parlament
Studie von: Österreichisches Institut für Wirtschaftsforschung – Hertie School gGmbH – Queen Mary University of London – Deutsches Institut für Wirtschaftsforschung
Restrictive monetary policy dampens inflation effectively, but it also raises stress in financial markets. This happens through revaluations of financial assets on banks' balance sheets and through dampened economic activity. Moreover, apart from the positive effect of exiting negative interest rates, banks' net interest margin is generally negatively affected by interest rate hikes. With most of the disinflationary impact of higher interest rates yet to materialise, monetary policy should allow the financial sector to digest the rapid rate hikes of last year by reducing the pace of tightening.
JEL-Codes:E, E58, F, E31
Keywords:Disinflation in the EMS and in the Non-EMS Countries. What Have We Learned?, Monetary Policy
Forschungsbereich:Makroökonomie und öffentliche Finanzen