samchain/econo-pairs-v1 huggingface dataset:
An increase in the policy rate normally leads to a stronger krone. This pushes down imported goods inflation. The krone exchange rate fluctuates, and the relationship between interest rates and the exchange rate is uncertain. Nevertheless, the exchange rate channel is an important channel for the transmission of monetary policy in a small open economy like Norway. The current high level of inflation is, as you know, not unique to Norway. Policy rates are on the rise in many countries. Had we raised the policy rate substantially less than other central banks, this could have led to a weaker krone and higher imported inflation. Chart: Should the central bank stabilise domestic or total inflation? A question that has been raised is whether the central bank should have disregarded imported inflation when setting its policy rate. [5] It could be argued that domestic inflation covaries more closely with the level of economic activity. [6] If this were the case, and the central bank stabilised domestic inflation, it would also stabilise output and employment. This chart shows underlying inflation, or total CPI-ATE inflation, and the rise in prices for domestically produced goods and services. The output gap is an indicator of the activity level. As shown in the chart, the difference in covariance with activity between the two indices is not very large.

That is why in its monetary policy strategy, the Committee has interpreted “high employment” to mean the highest level of employment consistent with price stability over time. This level may vary over time and is primarily determined by structural conditions, such as labour force composition, the tax and social security system and wage formation. If we had attempted to use monetary policy to keep employment over that level permanently, inflation could have accelerated rapidly. An even higher policy rate may then have been required at a later stage, which may in turn have increased the risk of an economic downturn. In the Norwegian wage formation model, the social partners put weight on employment and firms’ profitability in wage negotiations, which is also an assumption underlying our economic projections. Over time, the system of coordinated wage determination has likely contributed to greater real wage flexibility and to keeping unemployment low by international standards. Experience nevertheless shows that there is a clear tendency for wage growth to increase when the labour market is tight and competition for labour intensifies. Similarly, wage growth tends to edge lower when the unemployment-to-vacancy ratio is high. Monetary policy trade-offs in the event of a cost shock Let me now turn to how we are seeking, in the current high-inflation environment, to strike a balance between the aim of low and stable inflation and the aim of high and stable employment. Over the past year, the policy rate has been raised from a very low level.
An inflation target was adopted and the krona was allowed to float free. In Norway, the situation was somewhat different. The Norwegian krone had not depreciated as much when Norway left the exchange rate mechanism. Norway therefore returned to a fixed exchange rate regime, although this regime gradually changed and in 2001 Norges Bank also formally adopted an inflation target and a new fiscal framework was introduced. So our two countries have had a similar strategy for monetary policy based on an inflation target and a floating exchange rate since 2001. During this period there have been frequent and deep contacts between our staff, and I am thankful for all that we at Sveriges Riksbank have learned from these exchanges of methodologies and other experiences. However, the emergence of Norway as an oil nation has made Norges Bank unique in many respects, not least in managing a sovereign wealth fund. Norges Bank is one of very few central banks charged with such a task. In fact, this fund is one of the largest investors on the Swedish stock exchange. When Norway became an oil nation in the 1970s, the country started its journey to become one of the richest nations in the world. We Swedes have some-times been a little envious of this, and perhaps even thought it was a shame we no longer have the union! Huge oil revenues also create major challenges, and many countries have not managed so well. But Norway has.

In January 1817 it was the only bank in the country. It received deposits, but charged a fee for that service. Thus, today’s situation with depositors having to pay for keeping their money in the bank is not entirely a new phenomenon. In the 1870s Norway joined a currency union with Denmark and Sweden that lasted until the outbreak of the First World War. The Scandinavian countries enjoyed strong economic growth during this period. Large cross-border capital flows supported the industrialization of the Scandinavian countries, and financial integration driven by the gold standard and the currency union was probably a contributing factor to the favourable development. Both Sweden and Nor-way were relatively poor countries situated on the outskirts of Europe when Norges Bank was founded 200 years ago, but with the advent of industrialization in the late  BIS central bankers’ speeches  1  19th century both countries began their journeys to become two of the richest nations in the world. Economic and political developments in Norway and Sweden have also showed similar patterns in the period since the Second World War. The role of the central banks was very limited in both Sweden and Norway. The monetary policy decisions were made by the government and Norges Bank became more of a technical implementer of government policy. For much of the 1970s and 1980s, economic policy in both Norway and Sweden lacked a long term strategy and credibility. Inflation and wages soared, and lost competitiveness resulted in repeated devaluations.
Seasonally adjusted data suggest that prices of services recorded a quarter-on-quarter drop for the first time since the inception of the index. While this development was attributable to the sizeable fall in communication services, the rate of increase in other subcategories of services also slowed down (Figure 12). Specifically, annual rental inflation continued to fall steadily to an all-time low during the second quarter, which is a dramatic development (Figure 12). 4  BIS Review 133/2010  Prices of core goods excluding food, energy, alcoholic beverages and tobacco and gold, moderated in this quarter owing to euro depreciation as well as easing commodity prices (Figure 13). In line with these developments, core inflation indicators also declined in the second quarter (Figure 14). The downward trend in underlying inflation is also apparent in the recent course of seasonally adjusted data (Figure 15). It should be pointed out that the tax incentives in 2009 will put downward pressure on the annual rate of increase in core price indicators during July and October and that we expect core inflation indicators to remain consistent with medium-term targets in the upcoming period. BIS Review 133/2010  5  Accordingly, the uptrend in medium-term inflation expectations that started in the final quarter of 2009 slowed during the second quarter of 2010 (Figure 16). In fact, following the betterthan-expected price developments during May and June and the return of annual inflation to single digits, near-term inflation expectations were revised down markedly quarter-on-quarter (Figure 17).

However, current inflation expectations for 12 and 24-months ahead hover slightly above year-end targets of 5.5 and 5 percent for 2011 and 2012, respectively. 2. Monetary policy response  After commenting briefly on inflation developments, I would now like to cover the policies pursued by the Central Bank during the last quarter. Anticipating that inflation would decrease sharply following the last quarter of 2008, the Central Bank of Turkey (CBT) focused on alleviating the potentially harsh impact of the global financial crisis on the domestic economy. In this respect, the CBT has delivered sizeable cuts in policy rates, while providing liquidity support to facilitate the smooth operation of credit markets. Accordingly, policy rates have been cut by 1025 basis points since November 2008 (Table 1). Considering the favorable developments in credit markets and the moderate recovery in economic activity, the Monetary Policy Committee (the Committee) ceased policy rate cuts in December 2009. Notwithstanding the rapid increase in inflation during the last quarter of 2009 and the first quarter of 2010, I would like to remind you that the Committee, highlighting the persisting downside risks regarding the global economy and the consistency of core inflation indicators with the medium-term inflation targets, expressed that policy rates would stay at low levels for a long period.
In the spirit of building trust and agility during normal times, we have worked hard to strengthen coordination arrangements with our regional counterparts and key domestic authorities. To name a few, this has included the development of crisis management protocols that are outlined in the Strategic Alliance Agreement with PIDM, the Operational Framework for Financial Crisis Management and Resolution with the Securities Commission, and the Executives’ Meeting of Asia-Pacific Central Banks (EMEAP) Crisis Management and Resolution Framework involving 11 jurisdictions. Numerous refinements have been introduced, and several crisis simulations were conducted. All in response to anticipated changes in the financial and regulatory landscape, and to continuously elevate our level of operational preparedness. We remain committed to building strong relationships based on mutual trust that will serve us well through the uncertainties that invariably accompany any crises. And we continue to work on ensuring that these arrangements are credible when disaster strikes. For us, it is as important to encourage open and honest communications with our counterparts, as it is to have formal arrangements for information exchange. We cooperate with each other in conducting joint surveillance and capacity building initiatives. Through these collaborations, we gradually build respect, trust and goodwill, the kind that no framework can hope to manufacture. Let me now conclude. In no trivial part due to my mentors, predecessors and colleagues, past crises that affected Malaysia were well-managed, leading to speedy recovery with minimal losses to taxpayers, and the equally important structural transformations that followed. Clear statutory remits. Independent policy making.

Jaime Caruana: Reflections on financial information from the standpoint of a banking supervisor Speech by Mr Jaime Caruana, Governor of the Bank of Spain, at the 13th XBRL International Conference, Madrid, 16 May 2006. *  *  *  Introduction Good afternoon. I would like to begin by thanking the organisers of this 13th XBRL International Conference for their kind invitation to participate. I am delighted to have this opportunity to close today’s session by sharing with you some reflections on financial information from the standpoint of a banking supervisor. And it is, of course, a special pleasure for me to be able to address this audience in my home country. I guess that, looking from the outside, it might seem somewhat strange that banking supervisors and other regulators are taking such an active interest in a computer language. But I think that all of us here are very well aware of the role that tools such as XBRL can play in promoting the effective and efficient flow of financial information, and it is on this wider objective that I want to focus my intervention today. I will begin with a brief introduction to recall the important role that information plays in financial markets from a macroeconomic perspective.
The US monthly unemployment rate posted in April its biggest increase (over 10 pp) in the related time series to 14.7%, the highest level since the Great Depression in the 1930s. Preliminary estimates in the euro area point to a 3.8% decline in GDP in Q1. 5  As you know, Spain has been one of the countries hardest hit by the health crisis and, subsequently, by the impact of the containment measures on economic activity. More than two months after the state of alert was decreed, we now have significant statistical information on the scale of the shock to the Spanish economy. Specifically, a preliminary estimate by INE (National Statistics Institute) indicates that GDP fell by 5.2% in 2020 Q1, despite the fact the lockdown only affected the last fortnight of this period. Should this be confirmed, this quarterly decline in GDP in 2020 Q1 will be double that observed in the related quarter in 2009, at the height of the global financial crisis. As is to be expected, there has been a particularly acute reduction in the value added of certain services sectors, and construction has also been severely affected. 6  In the labour market, the pandemic and the measures adopted to contain it are also leaving a deep imprint. The figures on Social Security registrations reveal a reduction of almost 950,000 in numbers employed between mid-March and 30 April. Job destruction was mainly concentrated in the second fortnight of March (almost doubling the loss of jobs between end-November 2008 and end-January 2009).

All these measures, along with those relating to liquidity provision by the ECB, are intended to help banks better withstand this crisis and to operate as an active lever for promptly overcoming it. And there are already signs that this is proving to be the case. The containment measures adopted to halt COVID-19 contagion are entailing a very sharp drop in the revenues of many non-financial corporations. This has significantly increased their liquidity needs, which they are largely covering through resort to bank financing. Indeed, the latest (and as yet provisional) data, for March, reveal a year-on-year rise of just over 50% in the flow of new lending granted by banks to firms. This includes both new business and increases in the principal that may be drawn down in operations previously entered into (which have almost doubled). This demand for funding may have been met under better conditions thanks, on one hand, to the ECB’s support measures to bank financing, which have helped banks obtain funds under favourable terms; and, on the other, to the government-approved programme of public guarantees on loans to firms, which has mitigated the possible reluctance of banks to incur greater risks in a setting of high uncertainty and growing concern over credit risks. Hence, on the data published to 13 May, a total of 371,070 operations have been entered into under the public guarantee programme, of which 98% relate to SMEs and the selfemployed.
Moreover, it is worth noting that since the MPC’s mandate dictates that we should support growth and employment provided that it does not conflict with achieving the inflation target, we are in any case charged with seeking to eliminate that part of the shortfall in nominal demand that is associated with an output gap, or that can be eliminated without generating inflationary pressure. Second, hard-wiring in higher inflation for a while is not without risk. In many economic models – including the one I used earlier – it is only the real interest rate that matters: it is irrelevant whether a lower real interest rate comes about through a lower nominal interest rate or a higher inflation rate. In the real world, inflation erodes the real value of cash, nominal bonds and fixed-interest debts. In itself, that may reduce the impact on demand of the promise to keep policy loose for long. But it is also apt to breed suspicion of a deliberate attempt to inflate away debt burdens, and may thus lead to inflation expectations becoming de-anchored. This is a serious risk: we should not forget the high levels of unemployment in the 1970s and 1980s associated with bringing inflation expectations back under control. Third, maintaining low interest rates even after the economy has recovered carries financial stability risks. My baseline simulations suggest that the period of very loose policy is already quite extended.

b) Why have we decided to do more on 10 March? The comprehensive package that has been introduced by the ECB sends out two clear messages: First, our decisions are guided by our mandate which is to bring inflation back towards our target of 2% over the medium term. We are firmly set on this objective, and we have a broad range of instruments with which to achieve it. In addition to interest rates, we are also acting both on: bank credit easing with the new series of targeted longer-term refinancing operations (TLTRO 2); and on market financing via the extended QE asset purchase programme, to 80 billion EUR per month including corporate bonds. On top of that, we are guaranteeing that we shall continue to do so for as long as necessary – via forward guidance. So, negative interest rates are only part of a much more comprehensive package. We think that they have been effective, but they naturally have their limits. Furthermore, the Governing Council gave a strong signal of its will towards an internationally cooperative attitude, as it decided not to opt for a tiering system exempting banks from negative rates. 2  BIS central bankers’ speeches  Second message: our priority is to promote the financing of the real economy. The goal of TLTRO 2 is not, as some have claimed, to offset the impact of negative rates on banks.
One of the necessary conditions for the success of inflation targeting in the medium- and long-term is ensuring the soundness of financial sector, along with a central bank that can freely use its monetary policy instruments. These are just some of the important factors lying behind the restructuring efforts in the Turkish financial system in this period. With the increased efficiency resulting from adjustments in financial markets, the Central Bank will be able to pursue a monetary policy aimed at price stability. Here I would like to present some information on the monetary policy to be implemented in this transition period that will pave the way for inflation targeting in the medium- and long-term. The Central Bank will keep its interventions in the foreign exchange markets limited under the floating exchange rate system, but will only move to reduce volatility in exchange rates in case of excessive fluctuations. The Central Bank will support disinflation efforts by keeping monetary aggregates under control, and in addition, the monetary policy will be directed at achieving financial stability. The Central Bank will continue monitoring the targets on Net International Reserves and Net Domestic Assets, which are among the basic items on its balance sheet. These targets will be set also by considering financial stability. The money creation of the Central Bank against the increase in the money demand will be carried out by considering the indicative path for Net Domestic Assets.

In the near future, Turkey will unquestionably attain an economic and social level it deserves by reaching a social consensus and by taking appropriate policy actions today. Thank you all for listening to me. 4  BIS Review 35/2001
For instance, we need to consider to what extent it is the Riksbank that is best suited to carry out this type of measure and whether it might instead be a task for a government agency. Summary I would like to summarise my speech as follows: Resource utilisation is falling rapidly and is at an unusually low level. All of the measures of resource utilisation that we have provide the same general picture. But it is difficult to ascertain how low it is and when it will turn around. Different measures paint different pictures on this issue. The GDP gap implies that resource utilisation will fall to minus 4-5 per cent at the beginning of 2010 before it turns around, and the employment gap points to resource utilisation falling to minus 3 per cent in 2011 before the labour market begins to improve. However, in both of these cases the measures are based on very uncertain estimates of the available resources in the economy. It is also difficult to ascertain what consequences the low resource utilisation will have for inflation and monetary policy. The assessment we made at the most recent monetary policy meeting was that the policy rate ought to be cut to 0.5 per cent. With this cut and the low level of the policy rate that we envisaged, resource utilisation would show an upturn and underlying inflation would be close to two per cent during the forecast period.

But the connection probably still remains, albeit in a weaker form. This means that in our monetary policy we also have to take into account what effects resource utilisation has on inflation in the slightly longer term. I will return to this issue later on. Different measures of resource utilisation There is no clear-cut means of defining resource utilisation, nor of measuring it. When one tries to measure resource utilisation one is faced with different alternatives. For example, one can draw conclusions regarding resource utilisation in the economy by comparing output or employment with a trend, normal or ideal level. Examples of this approach include the GDP gap, the employment gap and the flexprice gap. Another alternative with regard to measuring resource utilisation is to use as a base responses to direct questions put to companies regarding, for instance, their utilisation of labour and capital. Both of these approaches have inherent difficulties. In the first case, one must relate actual output or employment to a trend, normal or ideal level that is difficult to determine, and in the second case one must rely on the companies’ own assessments of their resource utilisation. GDP gap A common means of measuring resource utilisation is to relate actual GDP to a long-term or trend level of GDP. This GDP level is also often called potential GDP, despite the word potential implying that GDP cannot be greater than this level.