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KOF Monetary Policy Communicator for the Euro Area, July 2024
The KOF MPC figure for 18 July 2024 is 0. At today’s meeting, the ECB’s Governing Council decided to keep the three key ECB interest rates unchanged.
Global Barometers decline slightly in July
After three consecutive increases, the Leading Barometer fell slightly, although it remained above average. The decline in the Coincident Barometer was even smaller. As a result, the indicator remains within the narrow range in which it has been fluctuating since the beginning of the year. Therefore, the slight decline in the Global Barometers in July currently does not mark a turning point.
Many firms plan to invest more; environmental projects are being scaled back
The semi-annual KOF Investment Survey reveals major sectoral variations in the investment expectations of Swiss firms. Investment planned for the current year is increasing only in the service sector but is stagnating in industry and even decreasing in construction. This decline is being accompanied by lower-risk investment projects and a reduced focus on environmental protection measures.
“Monetary policy in the eurozone will remain restrictive for the time being”
KOF economists Alexander Rathke and Alexis Perakis analyse the interest-rate decisions taken in the eurozone, the United States and Switzerland. They also comment on the political risks posed by the snap elections called in France.
Wealth tax: a minimum tax on the rich
Despite having very high incomes, the rich and super-rich often pay much lower income tax in percentage terms than middle-income households. In Switzerland, too, the income-tax burden on billionaires is often significantly lower than that on the rest of taxpayers thanks to the privileges enjoyed by business owners. However, wealth tax makes a significant difference here by stepping into the breach when income tax is no longer effective.
Why do households perceive inflation differently than firms and forecasting organisations?
Swiss households have been asked about their numerical inflation expectations as part of the SECO consumer sentiment surveys conducted since the beginning of 2023. Initial results show that households’ inflation expectations are higher than those of forecasting organisations and firms as well as the official inflation rates. Despite these distortions, the survey data provides valuable information on factors such as the anchoring of inflation expectations.