Will the inflation shock end soon? – «The situation in Europe is more complicated than in the USA» – News

Stock market cheers as US inflation eases. Many now hope that tight interest rate hikes by central banks to bring price rises under control will soon end. Marc Brütsch, chief economist at Swiss Life insurance group, shares this optimism.


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Marc Brütsch is the chief economist of the Swiss Life insurance group.

SRF News: Is this optimism justified?

Marc Brütsch: The US is in a favorable situation in that energy prices are already falling significantly. You pay less at the gas station than American drivers, so there is less pressure on the central bank to hit the brakes.

In Europe the situation is different. The security of energy supplies after the coming winter remains a big question mark.

But there is still a war in Ukraine. Another energy price shock may be coming.

In Europe the situation is different. The security of energy supplies after the coming winter remains a big question mark. Energy prices can therefore be expected to remain at least as high as they are at present, with the risk of pro-inflation. This risk is not apparent to the US.

So everything takes a little longer in Europe?

In Europe, inflation will remain stubbornly higher. However, we also expect that energy prices will now remain stable and that inflation rates in the Eurozone will peak in the first quarter of next year.

We will be close to recession in Europe.

The European Central Bank has long hesitated to raise interest rates. Now he has to fix it. Does it cause a decline in Europe, in the Eurozone?

That is it. That’s the price of fighting high inflation. This will tend to recession. There are regions in Europe where there are already signs that we are entering recession.

They say there is a recession in Germany.

In Germany, the probability of a recession is estimated to be particularly high. This is also confirmed by data from the real economy. The same goes for the UK.

And Switzerland? Will the National Bank get inflation under control in time without an economic downturn?

Even in Switzerland, inflation is higher than the national bank aims for. The National Bank is therefore fighting higher inflation by normalizing monetary policy.

The National Bank comes to the rescue that the Swiss franc has strengthened against the euro.

The National Bank comes to the rescue that the Swiss franc has strengthened against the euro. We import less inflation. That is why inflation is currently significantly lower in our country than in the countries of the eurozone or the USA.

However, consumers in this country are feeling the rise in prices. And there is much more, for example higher rents. Will Switzerland still come out with a black eye?

In Switzerland, the peculiarity is that certain factors will not be included in the price calculation until next year. Examples include higher electricity prices at the beginning of next year and – with a delay – also rents.

In Switzerland, the rate of inflation will not fall as quickly as in the US.

For this reason, the rate of inflation in Switzerland will not fall as fast as in the US. Even in Switzerland, the price will be that households will experience a real loss of purchasing power.

The interview was conducted by Jan Baumann.

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