16 September 2020
And we are back for season 2! On this episode, show hosts Dan Mikulskis and Mary Spencer catch up with Natalie Brain to explore the role of forecasting – and how things have changed over the last 6 months.
- Scenarios – the good, the bad and the central
- Broadening out bands of uncertainty
- The shapes of the recession, V, U or square-root recovery
- Risk of permanent scarring to the economy - behavioural / demand led shifts and uncertainty over employment
- Why we’re approaching a key couple of months economically in the UK with Brexit trade talks and the end of Furlough
- Is there a greater spread to economic forecasts in today’s environment – but does this reflect real uncertainty or does it reflect the false certainty in normal times... was the uncertainty always there? And why we currently “have permission to be less certain”
- Scenario testing with clients
- Some of the more extreme scenarios eg inflation, stagflation
- Alternative scenarios
- Is there a realistic pathway to higher inflation
- What hasn’t changed since the start of the year – surprisingly a few things:
- Role of monetary policy- continues to be the dominant paradigm
- US election – potential market implications of a Biden win (tax, curbs on tech giants, green energy investment)
- New Fed strategy – interest rates lower for (even) longer, supportive policy here to stay for a very long time, a key factor in markets
- Are we entering a new monetary policy paradigm / tipping point? It is hard to imagine how monetary policy gets back to a “normal” world
- EU recovery fund
- Any positive news among all the gloom? A push toward change on climate policy, and building back better
- Key main take away: the role of monetary and fiscal policy, and role of government in how economies and markets are functioning
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