Specialist
Specialist at Macrobond Financial AB
Agenda
- Divergence between BoE (Bank of England) and ECB (European Central Bank) behaviour and inflationary impacts, highlighting bank rate dynamics
- Forecast accuracy and alternative scenarios
- Interpretation of contrarian leading indicators for recovery dynamics
Questions
1.
Could you outline the lay of the land for the UK and European economies? How do you think we’ve reached the current situation?
2.
Do you think the BoE’s [Bank of England’s] response to the pandemic was fair? How has it differed from its historical behaviour?
3.
What percentage of inflation do you think is from negative supply side shocks vs demand pull? If the BoE is raising rates and there’s a lot of supply-side inflation in the system, how might that help the economy?
4.
We’re currently at a 1.75% bank rate in the UK. Is that correct?
5.
We have 10.1% inflation. Do you think it’s logical for the BoE to raise the bank rate by another 50bps at the next meeting? Is it logical to keep raising it in 50bps increments? How can you see that evolving over the next 12 months?
6.
How much do you think Q3 2022’s negative GDP growth could be? Do you think it’s 1%-2% or could it be larger?
7.
Do you think the BoE’s forecast of what will happen is accurate?
8.
How has the BoE’s behaviour differed from that of the ECB [European Central Bank]?
9.
What regional challenges is the ECB facing in comparison to the UK?
10.
Do you think the anti-fragmentation tool we’ve just discussed is fit for purpose? Might it have the desired effects? I think it could just distort bond markets further and encourage less fiscal conservatism in a highly indebted nation. Surely that won’t have the desired effect and impact across the eurozone.
11.
Which areas of Europe’s economy do you think will start to experience secular stagnation first? Where might we see those risks showing up?
12.
European inflation is around 8% and the ECB is forecasting to raise rates for H2 2022 and 2023. That differs from the BoE, which is forecasting rate cuts in 2023. Is that correct?
13.
Why do you think the ECB forecasting more and more rate rises, especially when a lot of the inflation is supposedly supply-side linked? Won’t that obliterate demand?
14.
Eurozone inflation is currently 8% and the ECB surprised the market last time with its rate hike, but the ECB bank rate is 0% currently. I don’t understand how it will tame inflation. Historically, we’ve seen that you’ve had to raise the bank rate above the rate of inflation to tame inflation. It’s currently at 0%. Could you see very aggressive rate hiking occurring from the ECB in the near future, maybe 100bps at a time?
15.
What do you think a plausible bank rate is for the ECB to settle on? Can you see it still hiking in 2023 or might it follow the herd of the Fed and BoE?
16.
You think the ECB will probably reach a maximum of 1.5% for the next bank rate. What do you think the BoE will reach within the same period before it starts decreasing rates?
17.
Given the environment we’ve been in and the lack of accuracy in central banks forecasting the inflationary episode, can you see any long-term damage to the ECB and BoE’s credibility? Do you think it will undermine their independence? Could there be some structural changes to central bank mandates?
18.
How do you think the competing impulses of taming inflation vs maintaining growth will actually play out across the eurozone and UK?
19.
Is a principal reason you think the Fed could pull off a soft landing because it’s not facing the same type of energy crisis that the UK and Europe is?
20.
How much, as a percentage, do you think the US Federal Reserve is demand- vs supply-driven?
21.
Regarding the UK and Europe, what are leading indicators of a deeper recession or stronger fast recovery?
22.
Are there any contrarian indicators that you think have been painting the picture better than the more commonly used ones? Pre-Interview, you mentioned you’d been looking at Baltic Dry. What can that tell us?
23.
Where do you think we’ll start seeing signs of recovery first, in the UK or Europe?
24.
Do you think there could be a housing price correction in the UK in the near future?
25.
When do you think a UK housing price correction might materialise, in H2 2022 or mid-2023?
26.
Is there anything we haven’t touched on that you’d like to highlight on the BoE, ECB or macro environment?
27.
Can you see a China-based recession happening?
28.
What do you think is the likelihood of a recession in China?
29.
What are the key headwinds and tailwinds facing the UK and Europe?
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