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Economists at Natixis analyze the consequences of the massive monetary expansion in response to the coronavirus crisis in OECD countries.

Key quotes

“It will not increase inflation, due to the disappearance of the link between the money supply and prices.”

“It will not make exchange rates move much, because all countries are conducting the same expansionary monetary policy.” 

“It will have little effect initially: if demand for money increases as much as the money supply in the short-term, this increase in the money supply will have no effect on the prices of other assets because the crisis will lead savers to hold monetary assets.”

“In the medium-term, it will lead to lower long-term interest rates and higher share prices and real estate prices.”