Alexander Glas and Julius Schölkopf (July 2024)
How Much Do Financial Analysts Disagree on the Future Path of the ECB’s Interest Rate?
In this policy brief, we analyze whether and how much professional forecasters and market analysts disagree on the nature and speed of future interest rate decisions by the ECB. We also consider the role of uncertain dynamics of future inflation and the economic recovery in the euro area to explain the dispersion of interest rate expectations. For this purpose, we asked the participants in the June 2024 wave of the ZEW’s Financial Market Survey for their expectations regarding interest rate decisions at upcoming Governing Council meetings. We condition the individual responses on the respondents’ short- and medium-term inflation and GDP growth expectations and supplement our findings with similar evidence for the US.
Media Coverage: Christian Siedenbiedel discussed the policy brief in the Frankfurter Allgemeine Zeitung (one of Germany’s leading economic newspapers) on July 9 (“Das große Zins-Szenario”) and cited our policy brief for commenting on the ECB’s Governing Council meeting on July 18. Moreover, ntv, Tagesschau, and finanzen.net also cited our study:
Alexander Glas, Lora Pavlova, and Julius Schölkopf (October 2024)
Impact of the US Presidential Race on the German Economy: Insights from Professional Forecasters
This policy brief analyses German professional forecasters’ views on the upcoming US presidential election in November 2024 and its impact on the German economy. Our analysis is based on recent data from the Financial Market Survey (Finanzmarkttest, FMT), a long-standing survey of financial market experts and professional forecasters in Germany. The FMT is well-known for producing the ZEW Indicator of Economic Sentiment, one of the most important indicators for the German economy. For our analysis, we first asked respondents to assess the likelihood of a Trump victory, conditional on several events that may affect the election outcome. Next, we gathered scenario-based forecasts for German GDP growth and inflation over the upcoming president’s tenure, depending on whether Trump or Harris wins the election. To better understand the differences in the conditional macroeconomic expectations, we asked the panellists which candidate they thought was more likely to achieve certain economic or political outcomes. Lastly, we included an open-ended question on possible measures the German government could take now to protect the German economy from potential adverse effects of the next US president’s policies.
Media Coverage: