Stefan Gerlach

Tracking Global Inflation A cross-country approach to identifying turning points in inflation

In today’s post, I look at annual inflation (the average monthly inflation rate over the past year) which is not very informative about current price pressures. By averaging across countries instead of over time we can get a better sense of current inflation.
open.substack.com/pub/swissmac...

Paris

Now at the SNB’s annual Karl Brunner Distinguished Lecture at the ETH Zurich. This year’s speaker is John Cochrane.

Lagarde says ECB’s interest rates stance not ‘fixed’ as markets doubt further cuts Central bank’s president stresses policymakers ready to act if ‘risks to inflation shift’

A very interesting speech, given at @suomenpankki.fi yesterday. The highlight was President Lagarde’s discussion of why the impact of the US tariffs on the euro area has been less than expected.

on.ft.com/4gTJCNE Lagarde says ECB’s interest rates stance not ‘fixed’

This is a good read by @tuomasvalimaki.suomenpankki.fi on the ECB’s operational framework.

www.suomenpankki.fi/en/news-and-...

Today I attended a timely and thought-provoking conference hosted by @suomenpankki.fi on monetary policy, geopolitics and trade. Highlights included speeches by Governor @ollirehn.suomenpankki.fi, Fed Vice Chair Jefferson and ECB President Lagarde.

Helsinki

Tariffs and Monetary Policy Why central banks should not simply “look through” tariff-driven inflation

In today’s post I review an article on tariffs and monetary policy. Central banks should not look through tariff shocks but rather manage to decline in economic activity to the new equilibrium level.

swissmacroandhistory.substack.com/p/tariffs-an...

Pre-dinner walk

www.rbnz.govt.nz/hub/news/202...

Anna Breman is leaving the Riksbank Read more on the Riksbank’s website.

A huge loss for the Riksbank — Anna Breman is leaving to be governor of the Reserve Bank of New Zealand.

www.riksbank.se/en-gb/press-...

Sandymount (Dublin)

Riksbank Preview: Weak Growth Tilts Decision Toward a Cut September decision hinges on how the Bank weighs recent data

The upcoming Riksbank decision is finely balanced, with a tilt towards no change. It will hinge on two factors. First, how confident the Riksbank is that inflation will decline? Second, how worried it is about the outlook for economic activity?
swissmacroandhistory.substack.com/p/riksbank-p...

SNB Moves Cautiously Toward Greater Transparency The impact will depend on the details

The SNB — a traditionally opaque central bank — will begin publishing summaries of its policy discussions. How much transparency improves will depend on the detail provided, though the small consensus-driven Governing Board sets natural limits.
swissmacroandhistory.substack.com/p/snb-moves-...

Quick comment: Swiss inflation in August Seasonal adjustment reveals summer uptick

Seasonally adjusted data show that Swiss inflation has strengthened over the summer, with annualised three-month inflation now running at about 1%. This suggests that underlying inflation is firmer than the annual figures imply.
swissmacroandhistory.substack.com/p/quick-comm...

The Acropolis of Athens.

Evening stroll

Zürich

Comments on Beyond the Taylor Rule Credibility, expectations, and why central banks bent the rules

In a paper presented at Jackson Hole, Emi Nakamura and her coauthors examine why central banks did not follow the Taylor rule when inflation rose sharply in 2021–22. The positive commentary the paper received prompted me to read it.
swissmacroandhistory.substack.com/p/comments-o...

Riksbank minutes: Inflation surprises and growth disappoints Autumn cut possible if inflation eases

The Riksbank kept rates at 2% in August. The minutes show that the Executive Board saw the inflation spike in June and July as temporary, worried about the lack of recovery, and may lower rates in the autumn if inflation returns to earlier levels.
swissmacroandhistory.substack.com/p/riksbank-m...

Monetary policy in Australasia RBA and RBNZ are likely to cut rates but for different reasons

Today’s post looks at RBA and RBNZ. Both central banks are likely to cut rates in the autumn — but for slightly different reasons.
swissmacroandhistory.substack.com/p/monetary-p...

Powell signals September cut likely at Jackson Hole If the incoming data do not surprise

At Jackson Hole, Jerome Powell signalled that September rate cut. With policy finely balanced and one month of data still to come, he avoided preempting the FOMC. Nevertheless, his words are the best guide to what the FOMC is likely to decide.
swissmacroandhistory.substack.com/p/powell-sig...

Monetary Policy decision: Policy rate unchanged at 2 per cent Read more about the monetary policy decision on riksbank.se.

The Riksbank keeps the interest rate unchanged, as I guessed in my earlier post. www.riksbank.se/en-gb/press-...

The Effective Tariff Rate in the US Since 1929 Tariffs are high but their impact on inflation is hard to detect

Dividing customs revenues by imports gives a measure of the effective tariff rate. Looking at historical data, I find no evidence that this measure drives US inflation, though the scale of recent increases makes the absence of clear effects puzzling.
swissmacroandhistory.substack.com/p/the-effect...

Could the US Default on its Public Debt? Lessons from 1933 Source: Federal Reserve Board.

A US default may sound implausible. History shows it is not unprecedented. swissmacroandhistory.substack.com/p/could-the-...

Clouds

Quick Comment: Riksbank to Hold Steady for Now Photo by Karin Gerlach

In today’s post I look at what the Riksbank might do next week. I think it will leave interest rates on hold but, at least to me, a cut seems likely in September.
swissmacroandhistory.substack.com/p/quick-comm...

SNB-Zinsentscheid im September: Was Experten nach dem Zollhammer der USA erwarten 39 Prozent Zoll sind ein schwerer Schlag für Schweizer US-Exporteure. In früheren Krisen sprang oft die Schweizerische Nationalbank als Retterin ein. Doch diesmal sieht die Lage anders aus.

A good piece in today’s NZZ, which notes that expectations regarding the September SNB meeting differ between analysts in Switzerland and abroad.
www.nzz.ch/wirtschaft/a...

Liechtenstein

From Tariffs to Taxes: The Long Shift in US Public Finance Punchline: Can tariffs help pay the bills?

Today’s post examines US federal finances since 1820. Tariffs once dominated revenues, but the federal government has grown so much that they are unlikely ever to fund more than a small share of its expenditures.
swissmacroandhistory.substack.com/p/from-tarif...