Why will inflation fall so much faster in the United States than in the Eurozone? Analysts at Natixis explain the reasons for this asymmetry between the inflation dynamics in the US and the Eurozone.

Four reasons for the different inflation dynamics in the US and the Eurozone

“We can expect inflation excluding energy and food to fall below 3% in the United States by the end of 2023, while it will probably still be higher than 5% in the Eurozone.”

“We see four reasons to expect inflation excluding energy and food to be significantly higher in the Eurozone than in the United States at the end of 2023. 1. Rising profit margins for Eurozone companies, while they are falling in the US. 2. The slight slowdown in wages in the US, while they are accelerating in the Eurozone. 3. The expected drastic slowdown in US rents, given their correlation with real estate prices, while they are accelerating slightly in the Eurozone. 4. The more restrictive monetary policy in the US than in the Eurozone.”