While business talks dominate the story this year, the Federal Reserve focuses on reaching its 2% inflation target. In your opinion, what will the Fed need to see in data to cut interest rates?
When it comes to inflation and tariffs, the major concern of the Federal Reserve is creating confidence that the inflation related to the tariff is fleeting-which means that tariffs promote inflation next year or after, but not indefinitely. In fact, at its latest press conference, Fed Chair Jerome Powell said that the fed would ensure that tariff inflation is fleeting.
In a way, tariffs may have a continuous effect on inflation, making companies less efficient, by adding costs. This involves creating disabilities in supply chains and reducing the money available for productivity enhancing investment. There is also a component of inflation expectations, where tariffs can constantly raise expectations of high inflation, which can create a feedback loop where consumers expect high prices, so they demand high wages to add costs to businesses, prices increase prices.
So they want to see the price hike in probably the coming months, which are the most dependent on imports, and then the most exposure to tariffs. But if we see that there is an increase in more wider-based value in 2026, it will be because tariffs will not tell this alone.
Of course, the Fed has a dual mandate. So it will have to balance the target of its inflation with its full employment mandate, and the labor market has softened softly over the last few months, so the photo of the developed employment will play a big role in the decision to cut the decision of Fed. As Chair Powell noted last month, Fed will get another month of jobs and inflation figures before his September meeting.
You also played an important role in the construction of Nasdaq’s IPO pulses for the US and Stockholm. How did you and the team decide on six factors showing directional changes in IPO activity?
In making both IPO pulses, we tested dozens of chains. But the first hurdle in selecting a series to test was that it should be a theoretical justification for it to be a major indicator of IPO activity. After that, we will test it to prove its empirical value. For example, both IPO pulses use evaluation as a component. Theoretical justification is that, if the evaluation is increasing, it should be more attractive to a company because it should be able to IPO in a better assessment. Then, empirical test showed that this is true.
We also wanted to cover a wide range of factors that could estimate the IPO activity. So we settled on evaluation, returns, interest rates, emotion, instability and measures of ownership data of Nasdaq. Since the launch of IPO pulses, these IPOs remain effective major indicators of activity.
