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Interest rate hikes: short-term gain, long-term pain for debtor countries
[Hausses des taux d’intérêt : des pays débiteurs gagnants à court terme, mais perdants à long terme]

Author

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  • Valérie Chauvin
  • Julia Schmidt

Abstract

In 2022, central banks around the world tightened monetary policy. Debtor countries such as France saw their Net International Investment Position (NIIP) improve as the market value of their debt plummeted. Yet, interest rate payments from newly contracted debt will deteriorate future current accounts over time, thus turning short-term gain into long-term pain. En 2022, les banques centrales du monde entier ont resserré leur politique monétaire. Les pays débiteurs tels que la France ont vu leur position extérieure nette s’améliorer, avec la chute de la valeur de marché de leur dette. Cependant, les paiements d’intérêts au titre des dettes nouvellement contractées détérioreront les futurs comptes de transactions courantes au fil du temps, les gagnants à court terme devenant perdants à long terme.

Suggested Citation

  • Valérie Chauvin & Julia Schmidt, . "Interest rate hikes: short-term gain, long-term pain for debtor countries [Hausses des taux d’intérêt : des pays débiteurs gagnants à court terme, mais perdants à long terme]," Eco Notepad (in progress), Banque de France.
    • Handle: RePEc:bfr:econot:341
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