Another look at our Global Monetary Conditions Monitor – the case of Hungary

Yesterday, we wrote a short post on Israeli monetary policy and linked to one page on Israeli monetary conditions to give an example of how the “country pages” in our – Markets & Money Advisory – new monthly flagship publication Global Monetary Conditions Monitor (GMCM) will look like. We expect to publish the first edition in March – coinciding with the launch of our new website.

So what is the GMCM? Overall one can say it is our attempt to create a measure of monetary conditions for investors and policy makers alike so they can track global monetary developments.

It will not be a forecasting publication as such, but obviously investors can use the publication to make informed decisions on investments as there certainly is no doubt that changes in monetary conditions have a significant impact on changes asset prices.

The overall structure in GMCM will be the following.

First of all, the firsts page (5-6 pages) will discuss global monetary developments with a particular focus on what we call the Global Monetary Superpowers – the Federal Reserve, PBoC, ECB, BoJ, BoE and SNB. The discussion will be based both on our new composite indicator of monetary conditions (see more below) in each of the “Superpowers” and on what the financial markets are telling us about monetary conditions and expectations for monetary policy.

This will be followed by a monthly “special topic” (1-2 pages). That could for example be about the relationship between our measure(s) of global monetary conditions and the development in equity prices or commodity prices or we could decide to zoom in on monetary policy developments in a given country that we find of particular interest.

Finally we will “country pages” for each of the 25 countries covered in the publication. The countries are the following:

Czech Republic
Euro zone
New Zealand
South Africa
South Korea
United Kingdom
United States

We expect to expand the number of countries to more than 30 countries in the coming months based on client requests and interests. The main focus is on countries with floating exchange rates with inflation targets or similar nominal targets. If  you are missing a country you are terribly interested in please let us know.

Each country page will consist of six graphs.

The first graph will be a graph for the development in our composite indicator for monetary conditions in that given country. This indicator is calibrated so that a value of zero indicates that the central bank is likely to hit its inflation target in the medium-term (2-3 years).

A score below (above) zero indicates that the central bank will undershoot (overshoot) its inflation target and hence is keeping monetary conditions too tight (easy). Overall, we define monetary conditions to be “broadly neutral” when the indicator is between -0.5 and +0.5.

The second graph will be a graph with an inflation forecast for the given country three years ahead. The inflation forecasts is based on composite indicator for the monetary conditions (assuming no supply side shocks).

In addition to that there will be four graphs on the sub-indicators on which the composite indicator is constructed.

These indicators are the following: Broad money supply growth (typically M2 or M2), nominal demand growth (typically nominal GDP or nominal consumption expenditure), exchange rate developments and finally the key policy interest rates.

For each of these these indicators we calculate a level or a growth rate, which we think would be consistent with the given central bank’s inflation target. Based on this we calculate a gap between the policy-consistent growth rate of for example the money supply and the actual growth rate of the money supply. This gap we use as input into our composite indicator.

The Hungary central bank is on track to (nearly) hit its 3% inflation target

Yesterday we showed an example of how such a country page in the GMCM would look like. Yesterday’s example was Israel because we had a Israeli monetary policy decision yesterday. If you missed it yesterday have a look at the country page for Bank of Israel here.

Today we have another monetary policy decision in Hungary. Therefore we think it is suiting to use Hungary as the next example of a country page.

This is how it looks.


If you want a closer look you can also see it in PDF here.

We are already getting a lot of feedback on the GMCM, but would be very happy to hear what you think so we can incorporate comments and ideas before the launch of the GMCM.

The Global Monetary Conditions Monitor will be priced at EUR 2,000 for a 12-month subscription. Furthermore, discounts can be negotiated for more than one subscription or as part of a general advisory deal.

If you want to hear more about Global Monetary Conditions Monitor please contact us by mail on (Lars Christensen) or (Laurids Rising).

See more on the Global Monetary Conditions Monitor:

M&M Advisory to launch new publication on Global Monetary Conditions

Our Global Monetary Conditions Monitor – what we write about Bank of Israel


Our Global Monetary Conditions Monitor – what we write about Bank of Israel

It is hard to be very critical about the conduct of monetary policy in Israel. I have earlier praised the Bank of Israel (BoI) for essentially being an NGDP targetter and when Stanley Fischer was BoI governor nominal GDP basically was kept on a straight line (see here).

And even though Fischer’s successor Karnit Flug initially back in 2014 kept monetary conditions slightly too tight (see here) it now seems like the BoI under Flug’s leadership is back on track.

At least that is what our – Markets & Money Advisory’s – composite indicator for Israeli monetary conditions is showing.

Introducing Global Monetary Conditions Monitor

The indicator will be part of the first edition of our new flagship publication Global Monetary Conditions Monitor (GMCM), which will be published in March and given the Bank of Israel today (3pm CET) has its monetary policy announce we thought it would be a good idea to share a page from the upcoming GMCM on israel.

You will see the country page on Israeli monetary conditions here.


You can also see the page as a PDF here.

When we put out GMCM there will be 25 such pages on different countries plus of course addition commentary on global monetary matters. A 12 month subscription will be priced at EUR 2,000.

If you are interested in more information on the Global Monetary Conditions Monitor please let us know. Mail to or

Please share!


As expected the BoI kept its key policy rate unchanged at 0.1%.

See more on the Global Monetary Conditions Monitor:

M&M Advisory to launch new publication on Global Monetary Conditions

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