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Even as we anxiously scan the horizon for harbingers of a downturn, the cycle continues to amaze us with its quiet power and its general propagation. To identify some of the essential ingredients of the current cycle, we should look to the great financial crisis of 2008. The depth of the crisis explains why it is taking so long for the scars to heal and why the real imbalances have yet to manifest themselves, especially in the shape of inflation. The upward cycle is therefore likely to continue for a few quarters yet. Monetary policies, which are accommodative despite actual or planned tightening, are underpinning growth. The resorption of public imbalances is made easier by low interest rates, and we see no reason why they should rise suddenly.
The cycle is gladdening due to its robust character and longevity, which can doubtless be explained by the brutal nature of the 2008 crisis. The recovery is continuing. There is no monetary urgency, and interest rates look set to rise slowly.
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