samchain/econo-pairs-v1 huggingface dataset:
As I noted earlier, the SCE is based on a representative sample of U.S. household heads, and the data highlight the rich heterogeneity of expectations held by consumers. For example, Slides 6 and 7 show the recent trends in median three-year-ahead inflation expectations overall and sorted by the education level of respondents. Slide 8 shows trends in inflation uncertainty, also by education. As is common in surveys of inflation expectations, more highly educated respondents typically report lower inflation expectations, and express less uncertainty in their density forecasts. We observe similar patterns when the responses are broken out by income, numeracy, or financial literacy. These differences could reflect heterogeneity in information sets, in individual experiences, or in the way people process information about inflation.29 Next, I’ll share two experiments we conducted during the development phase of the SCE in order to analyze the validity and information content of our inflation expectations questions. In the first experiment, which was financially incentivized,30 survey respondents were first asked for their inflation expectations. They were then asked a series of ten questions offering a choice between two investments, one yielding a nominal return that varies with inflation, the other yielding an inflation-protected payoff with increasingly large amounts over the ten questions.

Moreover, better supervisory oversight would also give us the agility to mitigate emerging risks before they materialize. Having said that, it must be acknowledged that we can’t regulate every aspect of the banking system. Ultimately, banks should assume prime responsibility for their actions and behaviors. Being dependent on public confidence, banks can ill afford to operate with weak corporate governance 4  or poor risk culture. This necessitates that banks maintain robust corporate governance standards, duly supported by strong internal controls, and prudent risk management. We are fully cognizant that these regulatory measures are costly for banks; nonetheless, costs of any financial crisis, both in financial and social terms, are far more substantial. Therefore, it is only wise and rational to strengthen the capacity of our banks in benign times. I believe our proactive approach has actually paid off, as banks in our region generally entered the low oil price environment from a position of strength. Yet banks’ resilience is not infinite and may come under severe pressure if necessary economic and structural reforms are dropped - or even delayed. Hence, we should not lose sight of the broader economic context in which our financial systems operate. After all, the banking sector is just a component of the overall economic landscape, though a very crucial one. While ensuring banking stability is critical, it is only a necessary condition for overall economic stability – and not a sufficient one.
After each ILTR operation, the Bank can use the pattern of bids to help assess whether the total amount on offer needs to be changed for the next monthly operation. In addition, we decided to index the clearing spreads to the subsequent out-turn for Bank Rate, with a minimum spread of zero so that there is no interest-rate risk to the Bank of England. Finally, the Bank is also able to respond to strains in short-term foreign currency funding markets, utilising swap lines with other central banks to conduct foreign currency OMOS. For example, in September 2008, the Bank, in concert with a number of other central banks, announced coordinated measures designed to address continued elevated pressures in US dollar short-term funding markets. 9  Initially the collateral list was expanded in the Autumn of 2007 and then again in Autumn 2008. 10  Our approach to risk managing these securities has been set out in the Quarterly Bulletin. See Breeden and Whisker (2010), Quarterly Bulletin, 50, 2, pages 94–103. 11  See Bank of England (2009), Annual Report and Accounts 2009. 4  BIS Review 126/2010  The Special Liquidity Scheme During early 2008, following the collapse of Bear Stearns, and with the continued closure of the securitisation markets making mortgage-backed securities and hence mortgages substantially illiquid, it became clear that additional and exceptional liquidity support would be needed for the UK banking system.

During much of this period, banks internationally were engaged in a highly competitive ROE race. Therein lies part of the explanation for these high returns to labour and capital in banking. 4. Explaining aggregate returns in banking – excess returns and risk illusion How do we explain these high, but temporary, excess returns to finance which appear to have driven the growing contribution of the financial sector to aggregate economic activity? In this section we discuss potential balance sheet strategies which may have contributed to these rents. Essentially, high returns to finance may have been driven by banks assuming higher risk. Banks’ profits, like their contribution to GDP, may have been flattered by the mis-measurement of risk. The crisis has subsequently exposed the extent of this increased risk-taking by banks. In particular, three (often related) balance sheet strategies for boosting risks and returns to banking were dominant in the run-up to crisis:   increased leverage, on and off-balance sheet;    increased share of assets held at fair value; and    writing deep out-of-the-money options. What each of these strategies had in common was that they generated a rise in balance sheet risk, as well as return. As importantly, this increase in risk was to some extent hidden by the opacity of accounting disclosures or the complexity of the products involved. This resulted in a divergence between reported and risk-adjusted returns. In other words, while reported ROEs rose, risk-adjusted ROEs did not (Haldane (2009)).
It naturally follows that the objectives set out in the first paragraph of the objects clause are primary objectives for the Bank and fully in line with the principles on which the Bank already bases its activities. 1/8  BIS central bankers' speeches  Trust in the stability of the value of money is the very foundation of the monetary system. In addition, households and businesses must be confident that the payment system will allow them to conduct transactions securely at all times. An efficient and stable interbank payment and settlement system also provides a necessary basis for the stability of the financial system. With financial system stability, investors can channel available capital to investments offering the highest return. Norges Bank also has a key role in the management of crises in the financial system. In a crisis, the Bank can supply liquidity both to influence market interest rates and to stabilise the financial system. Flexible inflation targeting The purpose of “maintaining monetary stability” sets a long-term objective for monetary policy. The day-to-day conduct of monetary policy requires a more operational target. Most countries set this target in the form of a regulation or a more time-limited mandate issued by the government. The operational target is set to meet the primary objective, but is also a means of holding the central bank accountable. Chart: Emergence of inflation targeting The objective of monetary stability is compatible with a range of operational targets.

Furthermore, government finances are solid and are not affected to any great extent by shortterm exchange rate movements, allowing the exchange rate to play an important role in absorbing shocks to the economy. Particularly in periods of falling oil prices, a weaker krone has had a stabilising effect on the business cycle. With confidence in the inflation target, monetary policy has been able to underpin such movements. At the same time, in a world of high capital mobility and extensive trade, monetary policy’s room for manoeuvre is constrained by the exchange rate channel. In a small open economy with a floating exchange rate, the domestic interest rate can differ from interest rates abroad. However, an interest rate differential that becomes too wide can lead to considerable exchange rate volatility, which will in turn feed through to inflation, output and employment. Thus, the domestic interest rate cannot be set without regard to the level of external interest rates. The room for 2/8  BIS central bankers' speeches  manoeuvre in monetary policy is further constrained in periods when external interest rates are close to or below zero. Under an inflation-targeting regime, a numerical target is set for the inflation rate, either in the form of a point target or a target range. In its conduct of monetary policy, the central bank aims to keep inflation close to the point target or the midpoint of the target range over time. Inflation can impose costs on society if it is too high and if it is too low.
I will point out two but discuss only one in detail. To be sure that we still recognize that this is a risk, the first risk is the next Covid-19 variant, whatever comes after Omicron. Although the public health officials have indicated that we have a high proportion of the fully vaccinated population and that the chances are that another variant might be milder, we cannot be certain. Moreover, these Covid-19 variants tend to pop up during the winter months, when they are the high season of tourism in Thailand. If another variant appears and derails the tourism recovery that we expect to see this year, this will be a significant risk to our growth outlook. The outlook that we are expecting to see is the number of foreign tourists this year in the range of 5 to 6 million, a big increase from last year but still very far off from the 40 million that we usually see. These figures also give you a sense of why we think the recovery will be relatively slow in Thailand. The second risk is the Russia and Ukraine conflict, and there are three channels by which it can impact the Thai economy, and I will flag the most relevant ones. Page 3 of 8  The first channel is through the financial markets. When some unforeseen event occurs, the financial markets get hit and become highly volatile, and there is a risk-off trade.

The stability charts – 3a and 3b – show the stability of growth and inflation in the G7 countries in the two time periods. In these charts a good performance is to be near the origin of the axes, close to the bottom left hand corner of the chart. The rather poor performance of the United Kingdom prior to 1997 is evident, as is the remarkable degree of stability in the United Kingdom relative to the rest of the G7 after that date. Of course, correlation does not imply causation. And there is little reason to suppose that the MPC is responsible for the higher average growth rate over the past decade. That more likely reflects structural changes in the UK economy, associated with other policy reforms. It is the stability of the UK economy which appears to be the most marked contribution of the MPC. That is a surprise. The conventional wisdom is that, although there is no long-run trade-off between the levels of inflation and output growth, there is a trade-off between the stability of inflation and of output growth. Inflation can be kept closer to the target only by larger changes in interest rates and bigger fluctuations in output growth. Policy-makers thus face a choice between different combinations of inflation and output growth volatility, which, when plotted on a chart, describe a “stability possibility frontier”.5 They can choose a point on that frontier depending on the relative importance they place on stabilising inflation and output growth, but they cannot move inside it.
The surge in house price inflation has reached a peak. If the króna remains relatively strong and stable, goods prices are also quite likely to fall. Thus the outlook is for a slowdown in the inflation rate in the coming months, not least because the depreciation of the króna this year has only been passed  BIS Review 82/2005  1  on to the domestic price level to a limited extent. If the housing market cools more quickly than the Central Bank forecasts, house price inflation is likely to slow down even more sharply than is currently expected. Foreseeable exchange rate developments, an ongoing surge in private consumption and greater-than-expected rises in unit labour costs, however, will outweigh these factors in the long run. The Central Bank has repeatedly cautioned against ideas that the inevitable difficulties accompanying a tight monetary policy can be avoided by abandoning the inflation target temporarily, or “letting inflation through”, as it has sometimes been called. This is an unrealistic option. Such a volte-face in Central Bank policy would immediately push up inflation expectations, fuel even higher wage increases and catalyse a depreciation of the króna and more inflation. Ultimately the policy rate would need to be raised by even more to bring inflation back down. Businesses and households would suffer more rather than less from such a policy. Nor should it be forgotten that a large share of household and business debt is either price-indexed or exchange rate-linked.

We also have a seat at the table in Basel with respect to the activities of the Bank for International Settlements (BIS), its various committees, and the Financial Stability Board (FSB). As I noted earlier, economics is a critical discipline at the New York Fed. The New York Fed economists are not just theoreticians. Most have a strong empirical orientation and work very  1  Eric Rosengren, President of the Federal Reserve Bank of Boston; Charles Plosser, President of the Federal Reserve Bank of Philadelphia; and Narayana Kocherlakota, President of the Federal Reserve Bank of Minneapolis. BIS central bankers’ speeches  1  closely with those in the Bank that are responsible for the execution of policy – be it with respect to monetary policy, financial stability, supervision or payments services. What’s special to me about the Bank is how the economists and non-economists work together to develop practical policy solutions to real-world problems and then implement those policies effectively. The breadth of activities at the New York Fed means that our economists contribute to policy in many different ways, working closely with other areas of the Bank including those who execute on our supervision, monetary policy, and payments responsibilities. We have about 60 Ph.D. economists in our Research Group. But we also have many more in other areas of the Bank, such as part of our open markets desk, in our supervision group, and in our risk functions.
Jointly with several countries in the region, we were positioned in the group of efficiency enhancers, meaning that reforms must be intensified to increase the growth efficiency and quality. Increasing the technological readiness was one of the identified priorities. Thus, in the last decade, the Macedonian productivity level has been staggering to around 40% of the level of advanced economies, such as German economy. This clearly points that if we want to grow at stronger pace and in a more sustainable, green and inclusive way, we need to continue intensively addressing the structural hurdles for the key long-term determinants of the growth: labour, capital and productivity. Let me focus on productivity. At this point, I think I can bring in the highlight of the latest Transition Report, i.e., innovation and digitalisation of the economies. The adoption of digital technologies can unleash productivity revival and possibly counteract some forces that act as drag on growth, such as adverse demographic and emigration trends that dampen the labour supply. What is the pace of digitalization of the Macedonian Economy? The new EBRD digitalization index points to a progress in both segments that are captured by the index – first, the preconditions for the use of digital technologies (digital infrastructure, skills, regulation, provision of government services), and second, the actual use of digital technologies by individuals and companies. The progress is particularly visible in the area of regulation and provision of government services, where score has more than doubled.

The economy is still below the pre–pandemic level, and even more importantly, the growth outlook is under new threat in the midstream of the recent upheavals in Ukraine. Subsequent shocks and the need to respond in crisis management mode increase the risk of distancing from structural policies that provide impetus to a faster transition and more productive growth. However, growth decomposition exercise reveals that even before the health crisis, the growth of the Macedonian economy, similar to the growth of other CESEE transition economies, was not predominantly driven by innovative and efficient sources. The average growth in the decade preceding the pandemics gravitated around 2.5%, somewhat above the CESEE average, with the contribution of total factor productivity (TFP), as a measure of economic efficiency and innovation, being relatively marginal. Although two thirds of growth dynamic was capital driven, the impact of the ICT capital was rather small. Labour had also positive contribution to the growth, but it was predominantly due to labour quantity, and less due to labour quality. During the pandemics, the bulk of the adjustment in fact went through the TFP which declined close to 5%, as the overall context was barely conducive for innovative decisions. 1/3  BIS - Central bankers' speeches  In this context, global competitiveness index in terms of innovation capabilities and ICT adoption locates us at the 97th and 70th rank (out of 152 countries), similar to Western Balkans peers, but much further from the advanced Europe.
But, additionally, in a crisis like this, as I have mentioned earlier, the deterioration of banks’ solvency is expected to hinge on their degree of exposure to the various regions and sectors which are being affected differently by the pandemic. In any event, as in the case of households and non-financial corporations, the public support measures implemented in recent months will help to mitigate the effects on financial stability. In particular, the government loan guarantee scheme and the various measures adopted by the ECB will contribute to smoothing the impact on banks’ solvency. The restrictions on the payment of dividends by banks also contribute significantly to this objective. And, lastly the moratoria will be useful so that the classification of loans as nonperforming is eased and distributed over time. Nevertheless, the impact of the COVID-19 crisis on financial institutions’ profitability is already clear. The banking industry’s already narrow profit margins of recent years – profitability actually stood below the cost of capital in the main European banking systems – were squeezed even further by the outbreak of COVID-19 and the need to record higher provisions to cover adverse developments in banking. Specifically, data from the first half of 2020 showed that listed Spanish banks had consolidated net losses of € billion, compared with profits of a similar order of magnitude in the same period in 2019.

At the same time, persistently high public debt (as will inevitably be generated by this crisis) would reduce the scope for action in response to future adverse shocks, expose the economy to a situation of chronic vulnerability and limit its growth capacity. In this situation, we should accept that the necessary short-term fiscal expansion must be accompanied by an ambitious reform agenda to address the structural challenges facing the Spanish economy and a fiscal consolidation programme, to be implemented as soon as the recovery firms. Without doubt, further analysis and experience will be required before we can draw all the lessons from this crisis. However, we should be aware, in any event, of the unprecedented scale of the collective challenge that we as a society face to return to a path of prosperity and opportunities for all. Hence, once again, I advocate broad-based agreements to shape the urgent, ambitious and comprehensive growth strategy that Spain currently needs. The financial system can and should make a significant contribution in this regard. Thank you for your attention. 17
The capacity of the Bank to react to a global worsening has been already proven during the episode of 2008–2009. The Board, as has been said time and again, has the flexibility and disposition to use these tools as needed. In this scenario, our latest Monetary Policy Report assumed that a somewhat more expansionary monetary policy would be necessary in order to accommodate and reduce the negative effects of the forecast external developments. The 25 basis point reduction in the monetary policy rate we applied in our last monetary policy meeting goes in this direction. At present our policy rate is at normal levels, and projected inflation and expectations two years ahead are aligned with the target for this variable. This situation grants us the flexibility we  2  BIS central bankers’ speeches  need to conduct monetary policy in the eventuality of a sharper deterioration of the external scenario with significant consequences to the Chilean economy. The financial markets have exhibited an increase in external credit premiums paid by Chilean banks and firms abroad, offset to some extent by base rates in record lows. In the local money market we have seen some frictions. As a response, the Bank has applied more active management of liquidity in domestic currency, in order to make sure that the money market operates in consistency with the orientation of our monetary policy.

Chile)  3.5  6.3  4.2  4.2  3.6  3.6  4.0  3.9  Commodity exporters  3.1  2.9  2.0  2.1  2.5  2.4  2.8  2.6  Trading partners  3.6  6.1  4.2  4.2  3.8  3.8  4.2  4.3  Terms of trade  8.1  23.8  -2.9  -  -6.7  -  -3.5  -  (levels) LME copper price BML $  -  342  401  -  350  -  340  -  Gasoline price $  -  598  804  -  784  -  748  -  (e) Estimate. (f) Forecast. (1) Assuming average economic growth for the rest of the world of 3.2% in the three-year period 2011-2013. (2) Assuming average economic growth for the rest of the world of 1.7% in the three-year period 2011-2013. Sources: Central Bank of Chile based on a sample of investment banks, Consensus Forecasts, the IMF and statistics bureaus of respective countries. Figure 1 Conditions of 90-day rates in CLP market(1) (2) (percent) 12  12  10  10  8  8  6  6  4  4  2  2  0  0 08  09  10  11  12  (1) Prime deposit rate. (2) Dotted vertical line marks date of CBC's REPOS purchase announcement. Source: Central Bank of Chile. 4  BIS central bankers’ speeches