Politiques monétaires : la marche à suivre

The tightening cycle has at last begun in the United States. Bond markets have joined this movement. The next step for central banks is to handle the huge rise of oil prices without derailing the still fragile recovery. Choosing to support growth rather than unnecessarily combat the temporary pick up of inflation should lead the Federal Reserve to a 125 bp increase of the federal funds rate (to 3%). The ECB should tighten its rate only once, by 25 bp. Counting on a softening of the housing bubble, the Bank of England should interrupt its tightening cycle after two additional moves. No move is expected from the Bank of Japan because the Japanese economy has not yet ended deflation.