- Switzerland's unemployment rate in November 2023 decreased to 2.1%, which is slightly less than the consensus forecast of 2.2%.
- The current unemployment rate is 0.09 percentage points above the one-year average but remains 0.30 percentage points below the long-run average, highlighting a relatively stable yet tight labour market in Switzerland.
- Some unrealistically academic policymakers worry that rising real rates from disinflation will excessively tighten monetary conditions. We firmly believe they are mistaken.
- Cost shocks eroded disposable income, but this real income and expenditure squeeze is fading. The income channel is far more important than the interest rate one.
- Uncertain policymakers should rely more on the data than misapplied theories. Resilient demand and persistent inflation would tell them to wait longer before cutting.
By Philip Rush
In his speech, Frank Elderson highlights the importance of effective banking supervision, especially in light of the recent financial crisis episodes. He emphasizes the role of prudential supervision in ensuring financial stability and mitigating moral hazard in the banking sector. Elderson discusses the ECB's supervisory mandate and the need for supervisors to step in when banks fail to manage risks properly. He also acknowledges areas in which banks have been slow in addressing shortcomings, particularly in internal governance and risk management. Elderson stresses the importance of timely and effective remediation and the use of enforcement measures to ensure compliance. Overall, he emphasizes the need for intrusive and effective supervision to prevent risks from turning into threats to financial stability.
Positivity score: 80
Uncertainty score: 40
- Mexico's year-on-year CPI inflation for November 2023 was broadly unchanged at 4.32%, slightly below market expectations.
- Core inflation in Mexico rose by 5.3% y-o-y (0.26% m-o-m) in November 2023, signalling relatively resilient underlying pressures, albeit not surprisingly so.