If the ECB aims to bring inflation down to 2%, it has not raised interest rates too much – Natixis

FXStreet Insights Team FXStreet

Many analysts are putting forward the argument that the ECB has raised interest rates too much. Economists at Natixis disagree with this idea.

There has been no rise in unemployment or transition to a situation of insufficient demand

Many analysts believe that the ECB has raised interest rates too much and that these rate hikes have caused activity to stagnate in the Eurozone in 2023, and probably in 2024. We disagree with this idea, since: The unemployment rate in the Eurozone is at its lowest; We are still seeing excess demand for goods and major hiring difficulties.

The ECB's restrictive monetary policy has not been enough to increase unemployment or to create a shortfall in aggregate demand for goods and services. For this reason, inflation will remain above the 2% target, and the ECB has not raised interest rates too much.

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FXStreet Insights Team

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