Conditions of inflation turning into hyperinflation much closer to being met in eurozone than in US – Natixis

FXStreet Insights Team FXStreet

Could inflation turn into hyperinflation in the United States or the eurozone? Economists at Natixis determine the conditions that must be met for inflation to turn into hyperinflation.

Is there a risk of hyperinflation?

“In the US, given that monetary policy is becoming restrictive (especially due to quantitative tightening), wage-price indexation is limited, the exchange rate is appreciating and the fiscal deficit has been sharply reduced, it is very difficult to defend the idea that the country will experience hyperinflation.”

“In the eurozone, if wage-price indexation increases, if interest rates (actual and expected) rise only slightly if the exchange rate continues to depreciate, and if fiscal policy does not become restrictive, inflation will be higher than in the US for a long time even if there is no hyperinflation.”

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