Global Monetary Conditions Monitor: Ms. Yellen, please ease up a bit!
By Lars Christensen, Founder & CEO Markets & Money Advisory, LC@mamoadvisory.com, @
Today we have published the July edition of Global Monetary Condition Monitor our monthly flagship publication, which covers monetary policy in 26 countries around the world and gives an overview of global monetary matters and market implications of global monetary trends.
In this edition of the Global Monetary Conditions Monitor, we introduce new ‘real-time’ forecasts of 2-year/2-year (2y2y) inflation based on our general Monetary Indicator framework.
From now on, we will be publishing 2y2y inflation forecasts for all 26 countries in the Monitor. The duration is important, because we believe it exactly corresponds to the policy-relevant time horizon for inflation-targeting central banks.
Our composite 2y2y global inflation forecast presently is 2.5%, which also happens to be the average inflation target for the 26 central banks we cover.
In the so-called Global Monetary Superpowers (the Fed, the PBoC, the ECB, the BoJ, the BoE, and the SNB), 2y2y forecasts are generally below inflation targets.
On a global level, however, this is offset by central banks in the emerging markets, which look set to continue overshooting their inflation targets.
Another reason why this edition of the Monitor may interest financial markets is that it reveals for the first time our assumptions (forecasts) for changes in monetary conditions across countries. These policy assumptions are crucial input in our 2y2y inflation forecasts.
Notably, we assume that the Federal Reserve, the SNB, and the Bank of Japan will all ease monetary conditions relative to market pricing within the next 24 months.
In the Fed’s case, this means interest rates will rise less aggressively than policymakers are communicating and financial markets are pricing.
The price for a single 12-months subscription to Global Monetary Conditions Monitor is EUR 2,000 (EUR 1,000 for academic institutions and think tanks).
Make sure to visit our Research Shop where you can subscribe to Global Monetary Conditions Monitor or download some sample pages from this month’s Monitor as well as ask questions about our research here.