Spillovers to the euro area from a sudden rise in the US term premium

Effets sur la zone euro d’une hausse soudaine de la prime de terme américaine

Daniele Siena and Urszula Szczerbowicz

Eco Notepad from Banque de France

Abstract: The US term premium (TP) has been very low by historical standards. Would its sudden rise affect the euro area (EA)? Lower US demand and tighter financial conditions would slow down EA activity. A surprise 1pp increase in US TP could reduce US and EA GDP growth by 0.4pp and 0.25pp respectively. Such effects would be smaller if the monetary authorities were to counteract the fall in inflation.

La prime de terme US est très faible en comparaison historique. Une hausse inattendue de 1 point de pourcentage (pp) de cette prime pourrait réduire la croissance du PIB de 0,4 pp aux US et de 0,25 pp dans la zone euro. Ces effets seraient moins importants si les autorités monétaires contraient la baisse de l’inflation.

Date: 2018-03-15
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