Markets still see 2% as the most likely ECB policy rate in 2026, but the ECB Watch Tool suggests it would not take much for a cut to 1.75% to become the central scenario. swissmacroandhistory.substack.com/p/quick-comm...

Today I return to global monetary policy. Looking at 10 central banks, I show how the mean versus the median of interest rates helps predict future interest rate changes. The data suggest that further interest rate moves are now likely to be modest. swissmacroandhistory.substack.com/p/back-to-gl...

The Riksbank is looking for a new Deputy Governor. Central banks should advertise all senior positions — if the pool is restricted to insiders there can be no presumption that the best possible candidate is appointed. www.riksbank.se/en-gb/press-...

That didn’t age well: www.bloomberg.com/news/article...

Yesterday the SNB released its first Summary of the discussion at its last monetary policy meeting. I was positively surprised and found it well done. Here is a post I wrote: open.substack.com/pub/swissmac...

Zürich

Stephen Miran, the Fed’s newest governor, used his first speech to argue that the neutral rate has plunged after this year’s sharp shift in US economic policy. It is a striking claim — and it raises the obvious question: is he right? swissmacroandhistory.substack.com/p/governor-m...

Pre-dinner walk

Great -- what enthusiasm! youtu.be/AHio_rKk5tE?...

Some comments on a very interesting recent Bloomberg article on the upcoming ECB appointments: swissmacroandhistory.substack.com/p/bloomberg-...

An interesting interview with Philippe Aghion. youtu.be/PCJn36esiyw?...

In today’s post, I look at the upcoming decision of the Monetary Authority of Singapore, MAS: swissmacroandhistory.substack.com/p/the-mas-at...

In today’s post, I look at Martin Schlegel’s excellent first year as SNB president. swissmacroandhistory.substack.com/p/martin-sch...

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.

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

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

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)

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...

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-...

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

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...

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...

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...

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...

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

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...

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

Clouds

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...

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

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...

Swiss inflation rose in July. The SNB’s decision to cut interest rates by merely 25 bps in June thus looks right. But what will happen next is anybody’s guess. swissmacroandhistory.substack.com/p/quick-comm...

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

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

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...

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.