Insights & Indicators 5 Questions for 2025
Jan 16, 2025
Dive into intriguing macroeconomic questions shaping 2025! Discover the evolution of monetary policy since the '90s and how tariffs factor into economic performance. Explore Europe's geopolitical challenges and the calls for increased defense spending amid shifting U.S. policies. Plus, see how upcoming reforms in Europe and political changes could influence tech investments and AI-driven market dynamics. This discussion is packed with insights for savvy investors looking ahead!
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Restrictive Monetary Policy
- The Federal Reserve's monetary policy has shifted from money supply growth to a neutral interest rate.
- This neutral rate, however, is unobservable and makes policy setting difficult.
Neutral Rate Mystery
- The neutral interest rate seems to have risen back to pre-2008 levels due to pandemic-related shocks and fiscal deficits.
- Current economic indicators suggest policy may not be truly restrictive, despite claims by the Fed.
The Purpose of Tariffs
- Tariffs can be used for revenue, re-industrialization, or non-economic bargaining.
- The ultimate purpose of proposed tariffs is unclear, creating uncertainty for businesses.