Imagine a world where prices never go up. Where the growth is regular. Jobs are being created, and unemployment is stagnating at incompressible levels. Add to that some cheap home loans that should stay that way for a long time, and you have not a perfect world, but the decade that has just passed.
For average consumers that we all are, the post-financial crisis years have been a comfortable one. For all the reasons mentioned above, and even though our salaries have not really increased, we have benefited from the absence of inflation.
But this economic and monetary anomaly could come to an end. Everywhere, tremors seem to want to announce it: the post-covid recovery, boosted by the new billions injected by central banks and governments, will resurface this good old inflation.
Good old lady, yes. Because it had been almost ten years since it was overdue. Not by consumers, as we have said, but by investors and the financial markets. They welcome the prospect of a return to a normal interest rate environment. Savers would find some semblance of return. Banks could better play their interest margins between what they lend and what they borrow. The pension funds could again count on a third party contributor who is not carried at arm’s length by stock market performance which we do not know if they are justified.
To perceive who will be the winners and who will be the losers from a return of inflation therefore seems relatively simple. Except that, for the moment, the debate is still open on two points. On the probability that this return will take place in the medium term. But also and above all, on the form and speed of this return. What is worrying is that the experts are either skeptical and do not believe it, or they are serene and consider roughly that it will be enough to “de-relax” the monetary policies of the central banks and to raise the rates. benchmark for digesting inflation.
But these are the mechanisms from before. The last time central banks had to moderate price increases, they were in familiar territory. This is no longer the case today. If the return of inflation provokes an excessively rapid rise in rates, it could put in difficulty those who have taken on debt for a house (households), a productive investment (companies) or for a revival of their economy ( the countries). Whether it is this year, the next or in five years, we must not underestimate the test of the normalization of the economy.