Stefan Gerlach

When virtue is its own reward: the July RBA MPB minutes Plus, the August TACO value pack

This is a very good read about monetary policy in Australia by @insteconomics.bsky.social. open.substack.com/pub/stephenk...

New Inflation Data Point to an RBA Cut Punchline: The Reserve Bank of Australia surprised markets by holding rates steady in July, but the decision seems more understandable in hindsight given the limited CPI data available at the time.

Today I take a look at inflation in Australia and the upcoming RBA meeting. Expect a 25 bps cut.
swissmacroandhistory.substack.com/p/new-inflat...

Stockholm

Monetary Policy, Singapore Style Punchline: The SNB is rightly seen by many, including me, as a leading small open economy central bank.

In today’s post, I look at how skilfully the MAS has managed monetary policy over the past 40 years, achieving an average inflation rate of around 2 percent.
swissmacroandhistory.substack.com/p/monetary-p...

So either the markets are wrong or we are overestimating the consequences of Trump’s policies. I tried to think through that with respect to Trump’s pressure in the Fed.

It is an enigma. I suspect that many of us have overestimated the negative effects of many of his policies. I had expected inflation to rise markedly, the US economy to slow and the markets to continue to sell off. It could of course still happen but so far it hasn’t.

Firing Powell Would Be a Mistake — But Not a Disaster Punchline: Speculation is rife that Donald Trump will fire Fed Chair Jerome Powell to force interest rate cuts.

I have been wondering why the markets have not sold off more in reaction to President Trump’s talk about firing Chairman Powell. This is where I end up. Views?
swissmacroandhistory.substack.com/p/why-replac...

Stockholm

A very good read in the Weekend FT.

Unconventional Monetary Policy: Fading Appetite at Central Banks? Punchline: After years of embracing unconventional policies like negative rates, QE, and forward guidance to fight low inflation, central banks’ appetite for such measures appears to have faded after ...

In today’s post, I argue that central banks have grown hesitant about Unconventional Monetary Policies. Though useful in a crisis, their continued reliance on these tools has drawn criticism from the public, politicians, and financial markets.
swissmacroandhistory.substack.com/p/unconventi...

2025, 17th Annual Feldstein Lecture, N. Gregory Mankiw," The Fiscal Future"

Greg Mankiw gave the Feldstein Lecture at the NBER Summer Institute on “The Fiscal Future.” It is well worth watching in you are interested in the how the US fiscal deficits will be resolved.

www.nber.org/research/vid...

Interest Rate Differentials and the Swiss Franc 2.0 Punchline: In an earlier post, I found little evidence that the SNB–ECB policy rate spread drives the CHF/euro exchange rate, likely because the ECB’s unconventional policies make its policy rate a po...

In today’s post, I return to the question of interest rate spreads and the exchange rate of the Swiss Franc against the euro. Two-year spreads work much better than policy rate spreads, perhaps because of QE in the euro area.
swissmacroandhistory.substack.com/p/interest-r...

Frankfurt

Quick Comment: Final June CPI Inflation for Sweden Punchline: June’s inflation numbers in Sweden came in higher than hoped for, raising questions about whether the Riksbank will keep cutting rates.

The final June CPI data for Sweden came in slightly below the flash estimate. Interestingly, by my estimate, seasonally adjusted month-on-month CPIF inflation has averaged 2.0% over the past three months.
swissmacroandhistory.substack.com/p/quick-comm...

The ECB’s Strategy Assessment: What is new and what is missing? Source: ECB

In today’s post I look at the ECB’s Strategy Assessment. As expected, no major changes but it missed an opportunity to spell out how its thinking about unconventional monetary policy has changed now that the side effects have become clearer.
swissmacroandhistory.substack.com/p/the-ecbs-s...

Great clouds this morning.

Quick comment: Swedish Inflation Surprises on the Upside Punchline: the flash CPI data for June were unexpectedly strong.

A quick comment about the Swedish flash CPI data that came yesterday.
swissmacroandhistory.substack.com/p/quick-comm...

After the June CPI Report, the SNB Looks Good Punchline: June’s CPI data shows that the weakness of headline inflation masks more resilient domestic price trends.

In today’s post I look at the June CPI data for Switzerland and the June SNB decision to cut interest rates by 0.25%.
swissmacroandhistory.substack.com/p/after-the-...

Interest Rate Differentials and the Swiss Franc Punchline: It is often believed the spread between SNB and ECB policy rates is a key determinant of the CHF/euro exchange rate.

Is the spread between the SNB’s and the ECB’s policy rates a driver of the exchange rate between the Swiss franc and the euro? Perhaps not so much!
swissmacroandhistory.substack.com/p/interest-r...

So this will be fun!

SNB Cut to Negative Would Be Much Bigger Step Than ‘Normal’ Reduction, Schlegel Says Swiss National Bank President Martin Schlegel said cutting interest rates below zero is a more significant move than a reduction above that level, suggesting the central bank may be hesitant to take s...

I agree.

www.bloomberg.com/news/article...

ECB's Nagel says bond-buying is only for exceptional cases The European Central Bank should only engage in massive bond buying in "absolutely exceptional cases" after this form of monetary stimulus caused it to report major losses, ECB policymaker Joachim Nagel said on Monday.

Makes sense. The same goes for negative interest rates too.

www.reuters.com/business/fin...

How well is the Fed doing? Punchline: Unlike most central banks, the Fed must balance inflation and unemployment.

In today’s post I use Pythagoras’ theorem to look at how well the fed is doing with achieving its objectives.
swissmacroandhistory.substack.com/p/how-well-i...

Sandymount Strand

The Riksbank, SNB, Norges Bank and BoE Meetings Punchline: The Riksbank, Swiss National Bank and Norges Bank responded to easing inflation and rising uncertainty by cutting interest rates.

In this post, I summarize and compare the press statements these central banks issued after their monetary policy meetings this week.
swissmacroandhistory.substack.com/p/the-june-d...

Quick Comment: Swiss economic activity Punchline: SECO’s index of weekly economic activity shows that economic activity declined following the tariff announcement on “Liberation Day” and has been recovering gradually since.

In this week’s second post I review SECO’s index of weekly economic activity. It declined following the tariff announcement on “Liberation Day” and the associated appreciation of the franc. It has been recovering gradually since.
swissmacroandhistory.substack.com/p/quick-comm...

Another Riksbank Rate Cut Looks Imminent Punchline: The Riksbank is likely to cut interest rates to 2.0% on 18 June.

In today’s post, I argue that the Riksbank will cut rates this week for the 7th time since May 2024. This decision reflects weak economic activity, inflation slightly above target but broadly benign, and a stronger krona.
swissmacroandhistory.substack.com/p/another-ri...

London

This Is No Time for the SNB to Go Negative Punchline: Swiss inflation has turned negative.

In today’s post, I argue that it would be premature for the SNB to cut rates by 0.50% and reintroduce negative interest rates at its meeting next week.
swissmacroandhistory.substack.com/p/this-is-no...