Key events
It is impossible to recall a time in this letter when we were able to avoid speaking of a worsening in the global geopolitical situation.
The feeling is that September witnessed such an escalation that it led U.S. President D. Trump to reconsider the stance of the world’s leading power.
The raid carried out by the Israeli air force on Qatar on the 9th was certainly not well received in Washington, and during the recent U.S.–Israel summit it became clear that the time may have come to consider a peace plan for the Middle East with a different approach from the one adopted until now.
On the Eastern European front, the constructive intentions expressed at the mid-August U.S.–Russia summit in Alaska were dramatically contradicted by events: attacks against Ukraine have intensified, and there have even been troubling aerial incidents beyond the borders of the countries directly involved in the conflict.
Those who sought to present themselves as peace brokers now face counterparts determined to thwart every attempt at reaching peace. In short: while there is some hope for improvement in the Middle East, the reality in Eastern Europe has grown even more complex.
The emphasis and pageantry displayed by China during the events it hosted earlier this month confirm that the Russia–Ukraine war has in fact become an outlet for a confrontation between the U.S. and China.
This is a dualism that is becoming increasingly stark, with significant repercussions on a global scale.
“Highly unusual state.” Definition of the current U.S. macroeconomic situation provided by FED Chairman J. Powell following the regular meeting of the FED.
Central banks have reconvened following the summer break.
The ECB and the SNB did not introduce any major changes: interest rates remained unchanged, and in both cases it was reaffirmed that the current level is consistent with the need to maintain a “neutral” monetary policy.
Both institutions share a single mandate: ensuring price stability, which implies that economic growth is considered an indirect objective.
Just as in Frankfurt, in Zurich there is no perceived need for additional stimulus measures. As anticipated the FED cut its policy rate by 0.25%.
Recent statements by its chairman, J. Powell, regarding growing difficulties in employment had created genuine expectations of a rate cut, not to mention that D. Trump’s pressure to lower the benchmark rate had stirred some concerns regarding the independence of the monetary institution.
The subsequent press conference drew considerable attention. Powell made no secret of the fact that the state of the U.S. economy presents problems that are not easily resolved.
Inflation has not returned to the 2% target set by the FED mandate, and the imposition of customs duties poses an upward risk for this indicator. On the other hand, the evolution of
employment is equally, if not more, a significant concern.
The Fed has therefore been much more focused on this latter point, to the extent that for upcoming meetings it is expected that the policy of gradually reducing the cost of money will continue. In the middle of the month, just a few days before the usual monetary policy meeting, we had the opportunity to attend a conference held by Martin Schlegel, Chairman of the Governing Board of the Swiss National Bank.
The main message conveyed was that of transparency, essential for a central bank to inspire confidence among various economic actors. In this context, it was announced that our central bank will also begin publishing a summary of the discussions held during ordinary monetary policy meetings. It should be noted that these meetings are held quarterly, unlike the monthly schedule of other major central banks.
The assessment of the Swiss macroeconomic situation was generally positive. Schlegel confirmed the validity of the strategy adopted for some time, despite the significant global changes underway. The uncertainties, he emphasized, are nothing new and are addressed through the definition of alternative scenarios, with the selection of the one that offers the greatest flexibility in relation to current trends. In conclusion, the SNB President stated that he sees no need to modify the current operational approach.
PROSPECTS
The final quarter of the year began with the “shutdown” of government activities in the United States, an event that in the past had often been averted at the last minute.
This confirmation of uncertain times occurs in markets that, despite everything, remain positively oriented, supported by the Fed’s expansionary policy.
However, the strong movements recorded across various asset classes in the first months of 2025 reinforce the need to maintain maximum flexibility.
After the turbulence at the beginning of April, it proved successful to return immediately to a constructive stance—a concept that, in any case, goes hand in hand with consistently high vigilance.