Stefan Gerlach's picture
Affiliation: 
EFG Bank
Credentials: 
Chief Economist

Voting history

Labour Markets and Monetary Policy

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Question 2: Do you agree that, in a period of great uncertainty and after a prolonged period of weak real wage growth, monetary policy makers can afford to wait for greater certainty about real wage developments and building inflationary pressure before raising interest rates?

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Answer:
Disagree
Confidence level:
Confident
Comment:
Monetary policy is exceptionally expansionary in many countries, which has been appropriate given economic conditions. But they have a long way to go before interest rates have been "normalised" and there is a risk that they might fall behind the curve. That suggests to me that a little bias in favour of higher rates might be appropriate.

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Question 1: Do you agree that a strong labour market is a good indicator of building inflationary pressure?

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Answer:
Agree
Confidence level:
Confident
Comment:
I believe that the relationship between the state of the labour market and inflation remains unchanged; what has changed is how best to measure the strength of the labour market. In the past when part-time work was limited, the level of unemployment worked well. These days, when many firms want to have some part-time staff and many workers prefer part-time employment, other measures, such as the number of workers that are involuntarily part-time employed or working shorter hours than they would like, might work better.

Bitcoin and the City

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Question 2: Do you agree that the regulatory oversight of cryptocurrencies needs to be increased?

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Answer:
Agree
Confidence level:
Very confident
Comment:
The regulatory oversight needs to be increased if and when crypto currencies become an important part of the financial system

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Question 1: Do you agree that cryptocurrencies are currently a threat to the stability of the financial system, or can be expected to become a threat in the next couple of years?

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Answer:
Agree
Confidence level:
Confident
Comment:
Crypto currencies are currently not a threat to the financial system but could very well become a serious concern in the near future if they become more important. If that happens, I would expect financial regulation to be introduced and central banks to issue ecurrencies to compete with them. It is inconceivable that any major component of the financial system would remain unrelated in light of the obvious risks. .

Global risks from rising debt and asset prices

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Question 2: Is the loose monetary policy of major central banks responsible for the recent increase in global leverage or asset values?

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Answer:
Agree
Confidence level:
Confident
Comment:
Monetary policy, in the form of lower interest rates, works by increasing asset prices and stimulating interest-sensitive spending, in particular on private and commercial real estate. If a sharp economic contraction occurs and central banks respond by cutting interest rates sharply, we would expect to see rising stock and property prices, and rising bank lending. Much of what commentators now worry about are thus the predictable effects of expansionary monetary policy -- this is how monetary policy works. That said, rising wealth inequality is a serious problem that strikes at the heart of social cohesion, but one that is best tackled by income redistribution through the tax system. The idea that monetary policy should worry about income inequality is misguided.

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