samchain/econo-pairs-v1 huggingface dataset:
The operational target of monetary policy as defined by the Government is inflation of close to 2.5 per cent over time. The inflation target provides economic agents with an anchor for their decisions concerning saving, investment, budgets and wages. Households, businesses, public entities, employees and employers can base decisions on the assumption that inflation in Norway will be 2½ per cent over time. The responsibility for implementing monetary policy has been delegated to the central bank. This is also the case in comparable countries. The central bank shall exercise professional judgement within the framework of its mandate. Assessments of economic developments and the basis for interest rate decisions are presented to the public. This makes it possible for others to gain insight into the assumptions and analyses underlying interest rate decisions. The operational target is well defined. The Bank’s judgement can therefore be evaluated retrospectively. Norges Bank explains the reasoning behind its judgement in its annual report. The Bank’s reporting requirement is set out in § 75, litra c of the Constitution, which stipulates that the Storting shall supervise Norway’s monetary system. Up to 1950, the annual report was submitted directly to the Storting. Today, in keeping with the Norges Bank Act, it is sent to the Ministry of Finance for submission to the King in Council and communication to the Storting in the Government’s credit report. The law thereby provides a framework that allows the government authorities to follow up the performance of the delegated responsibility for monetary policy.

Many approaches were tried, some proved their worth, while others were abandoned. The establishment of these monetary institutions was not a constant reinvention of the wheel; rather, progress was evident. The sound institutions that have grown in this way represent valuable capital for our country and have made a significant contribution to Switzerland’s prosperity. I feel that it behoves us to become familiar with the history of our monetary and currency institutions. This is true not just for the employees of the SNB, but in particular for them. In fact, this was the original idea behind Professor Baltensperger’s book, namely to improve employees’ knowledge of Switzerland’s economic history. Or, expressed in a different way: To encourage them to “become familiar with the ground on which we lay our foundations”. On the initiative of the former Chairman of the Board, Jean-Pierre Roth, an internal seminar on the history of the Swiss currency in the 19th and 20th centuries was organised in the autumn of 2008 and in the spring of 2009. It became clear that no work yet existed which covered the entire period of the history of the Swiss franc. It was this realisation that laid the foundation for this book. The book was ultimately written by expanding on the material derived from the internal seminar. As you will be able to conclude for yourself after reading the work, the result can certainly be considered a resounding success. The book by Professor Baltensperger is a beautifully illustrated work with fascinating contents.
With respect to bond market development, we have taken a more active role both in the primary and the secondary market. This is because the bond market is where we operate monetary policy through liquidity injection and absorption in order to align short-term interest rate with the policy interest rate. Therefore, the more developed and efficient the bond market is, the more effective the monetary management would be. Besides, a vibrant domestic bond market is essential for a robust and efficient financial system, which is a solid foundation for long-term economic stability. In the primary bond market, while meeting with the sterilization needs, the issuance of BOT bonds and bills are also designed to promote the bond market. In particular, we coordinate closely with the MOF on issuance schedule to provide regular and predictable supply, reduce auction frequency and consolidate issuance to reduce the number of issues in order to  BIS Review 118/2008  5  facilitate secondary market trading. The BOT bonds have helped widen investor base and contributed to the growth of mutual fund industry, as retail investors are seeing this as an alternative to banks’ deposit. Other than the issuance of BOT bonds and bills, we also introduced floating rate notes to add diversity to the products in the market as well. With respect to secondary bond market development, developing the private repo market has been one avenue that the Bank has adopted to enhance a more liquid bond market.

This formal process of close coordination would help ensure that monetary policy is aligned with the country’s overall economic policy direction. More importantly, it will also contribute to a greater understanding of the public at large of the fact that the only long-term role for monetary policy is in creating an environment of price stability which would help support sustainable economic growth. In addition to the mandated responsibility of maintaining price stability, the BOT has also taken a direct role to further develop Thailand’s capital market and its infrastructure via our involvement in the National Capital Market Development Committee and the Domestic Bond Market Development Sub-committee which were set up to coordinate capital market development efforts among government agencies as well as the private sector. With regard to equity market development, beginning in 2002, we have taken a step-by-step approach in opening up outward portfolio investment, by first allowing institutional investors, such as mutual funds and insurance companies, to invest abroad. This year, as Thai investors have become more familiar with diversifying risks abroad and with financial instruments in more developed markets, we have now allowed Thai individuals to invest abroad through local securities company. Through this initiative, not only local investors and professionals in the capital market industry would have a better understanding of the link between the local market and the global market, as well as risk management strategy, it would help contribute to higher standards and practice in the local capital market in the long run.
2  Estimation of an error-correction model in which the projection of the NFC lending rate depends on the lagged OIS3M and OIS2Y 3 April 2023 euro area bank lending survey (europa.eu), released on May 2, 2023  Page 7 sur 14  By the way, the growth of loans in France remains significantly higher than in the euro area average. Overall, evidence shows a quick and smooth pass-through of ECB decisions to broad financing conditions. But this is only the first part of the transmission to tame inflation. II. Transmission to the real economy and the decline in inflation In the textbook theory, tighter financial conditions moderate aggregate demand. Monetary policy also affect inflation through the exchange rate channel, but this is beyond the scope of my speech today. According to recent ECB work based on a set of models that complement each other,4 our policy tightening is estimated to lower inflation by around 2  4  Darracq-Paries, Motto, Montes-Galdón, Ristiniemi, Saint Guilhem and Zimic, A model-based assessment of the macroeconomic impact of the ECB’s monetary policy tightening since December 2021, ECB Economic Bulletin, issue 3/2023. Page 8 sur 14 percentage points as a mean over the period 2023-2025. But these estimates call for two caveats: - they vary substantially across models, and are lower in semi-structural models, which unlike structural or DSGE models, incorporate more inertia in consumption and less influence of forward-looking inflation expectations.

Since our forecast of June 2001, the world economy has moved towards recession. Short-term inflationary pressures have subsided considerably. On the assumption that the three-month Libor rate will remain stable at 1.75% during the next three years, inflation should amount to 0.9% in 2002, move up to 1.3% in 2003 and reach 1.5% in 2004. The fluctuations in the anticipated 2002 inflation rate are due to basis effects that do not reflect the inflationary trend. Inflation is expected to remain within the range of price stability throughout the forecasting period. From mid-2002 on, however, it will follow a slight upward trend through the rest of the forecasting horizon. This slight rise in anticipated inflation is attributable to two factors. First, the world economy will recover in due course. Second, Swiss monetary policy at a constantly low interest rate - which is currently 1.5 percentage points lower than in the June 2001 forecast - will tend to have an increasingly expansive effect as time passes. These two factors combined will cause inflation to rise somewhat over time. Our forecast is based on the assumption that the US economy will remain in recession until mid-2002 and will subsequently gradually return to its potential growth path. In Europe, the economy will presumably stagnate until mid-2002 and pick up momentum afterwards. We expect the US dollar to remain roughly at its current level vis-à-vis the euro. The forecast assumes that today's relatively low oil prices will eventually climb back slightly.
Conclusions for monetary policy All in all, growth prospects for the short term are somewhat more unfavourable than when we published our most recent inflation forecast. However, the major economic policy realignment in a number of important countries looks like paving the way for a recovery after a time. But this does presuppose that households and firms really do start to consume and invest. Major risks here are saving imbalances and over-investment. In Sweden, too, there has been an expansionary realignment of economic policy that is helping to strengthen household income. Provided there is an international recovery, the weak krona should have a stimulatory effect on exports. As regards inflation, the rate since April this year has been above the Riksbank’s target. The increase is mainly due to transitory factors and I envisage that it will, as before, dwindle during the spring. This presupposes, however, that the price rise does not spread to other items or lead to wage increases. Another argument for a future easing of inflationary pressure is the existence of unutilised resources as a result of the slowdown. However, in my opinion, the Riksbank must watch developments closely to ensure that the recent rise in the inflation rate actually falls and does not stick. Most indicators appear to imply that inflation will be close to the target level of 2 per cent, or at least within a small margin on one side or the other.

The financial crisis has emphasised the close links between the health and behaviour of banks and the state of the economy. We are remembering a very uncomfortable lesson from history that should not have been forgotten. But, forgotten it was. We have a very big programme of reforms under way, with the central objective that we must not let a financial crisis of this scale happen again. At the heart of this programme we are trying to knit together monetary policy and financial stability in both its macro- and micro-prudential forms, something that has not been done properly for a long time. I say that quite deliberately, because such coherence was not present prior to the reforms of 1997, so this is more than a change to recent arrangements. The new macro-prudential approach to financial stability will see the establishment of the Financial Policy Committee (FPC), charged with the primary objective of identifying, monitoring and taking action to remove or reduce systemic risks with a view to protecting and enhancing the resilience of the UK financial system. In June, the Chancellor announced that the government would amend the Bill to give the FPC a secondary objective so that, subject to being content on the first objective, it should support the economic policy of the government, including its objectives for growth and employment. Currently, the FPC is acting in an interim capacity to undertake as far as possible the future statutory FPC’s macroprudential role.
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would the economic downturn take on the shape of a U? Or would the USA simply experience a recession in the backwater of the burst IT bubble? At the Riksbank we were discussing a “banana-shaped” development from an early state, which could best be interpreted as a very long drawn out U. And even in the USA, the assessments had already changed from V to U even before the catastrophe and there was talk here and there of the possibility of a recession. The positive figures expected with regard to consumption and investment had largely failed to materialise, despite interest rate reductions and tax relief, while unemployment had increased and consumers found it more difficult to pay their debts. Nor had the stock exchange shown the upturn expected by many. Of course, the tragic events in the USA will have a severe dampening effect on the business cycle, at least in the short term. A number of central banks, headed by the Federal Reserve, have therefore lowered their steering interest rates. The Executive Board of the Riksbank also decided last week to lower the repo rate by 0.5 percentage points from 4.25 per cent to 3.75 per cent. Subdued inflationary pressure as a result of lower resource utilisation both in Sweden and abroad was judged to overshadow any price increases caused by the continuing weak krona. We stated in the press release that “the uncertainty occasioned by last week’s act of terrorism creates the risk of a further dampening of global demand.
With the assistance of a specialized international consultation, we believe this shall be a new, contemporary law and it shall identify a number of issues addressed in the form of FSAP recommendations. Starting from July 2005, the automated electronic clearing house system commenced to operate. Currently, we are working on completing the regulatory framework with a view to augmenting the services provided to the economy, aiming primarily at automating utilities’ periodical settlements. In November, the Bank of Albania Supervisory Council amended the Regulation “On licensing nonbank entities”, aiming at involving all non-bank financial institutions which operate in the territory of the Republic of Albania in the Bank of Albania licensing and supervision scheme. In October 2005, the Bank of Albania Supervisory Council approved the new organization structure of the Bank of Albania, placing a major emphasis to enhancing legal counselling, statistical service and public communication. These tree functions are deemed as very significant, in particular when considered in the context of our objectives related to monetary policy and EU integration. BIS Review 88/2005  1  Another short-term FSAP recommendation related to improving Bank of Albania transparency is now accomplished. Every interested person could be informed on the rules that the Bank of Albania pursues when it intervenes in the foreign currency market or be acquainted with the present agreements between the Bank of Albania and the Ministry of Finance. We have been intensifying our efforts to reaching to a rapid and effective solution as regards the Credit Information Bureau.

The median SMA respondent also anticipated euro area inflation returning to 2% at the end of 2024. Therefore, our October decision was consistent with market analysts’ expectations of a policy rate path whereby inflation is expected to return to target by the end of our medium-term projection horizon. 3  2  See Burriel, Kataryniuk, Mo reno and Viani (2022), “A new supply bo ttlenecks index based o n newspaper data”, Working Paper, Banco de España (fo rthco ming). 3  Surveys by Blo o mberg and Reuters befo re o ur Octo ber meeting po inted to similar co nclusions. However, the latest Survey o f Pro fessional Fo recasters (SPF) pro jected an inflatio n rate o f 2.4% in 2024, mo re in li ne with the ECB’s September fo recast. 2  With the recent interest rate hikes, we have made substantial progress in withdrawing monetary policy accommodation. Since July, we have raised interest rates by 200 bp – the fastest increase in the history of the euro. But we are not done yet. We will need to move rates to levels that allow inflation to converge to our 2% medium-term objective. And for this, we still have some way to go. 4 However, given the high degree of uncertainty of the inflation and economic outlook, the specific level that interest rates may have to reach to be consistent with this objective is uncertain, as it is entirely data-dependent and may change over time.
A crucial point is to avoid any tax distortions to the detriment of these products compared to liquid and risk-free investments. It remains all the more essential to fully inform investors about the risks involved when they invest their savings; two examples come to mind today, unit-linked contracts, and managers offering disintermediated financing. 3) My third and last collective wish for 2016 is that of financial stability and sound financial institutions. Since the financial crisis, the regulatory framework and the supervisory and oversight architecture have been considerably strengthened. This was necessary, I believe no one here doubts it. In the banking sector, this involved implementing Basel III / CRD4-CRR, finalising the TLAC, the new anti-shock weapon, and setting up the European banking union, which now includes two effective mechanisms: the single supervisory mechanism, and -since 1 January- the single resolution mechanism. Today, French banks are sounder: their core Tier 1 solvency ratio stood on average at 12% in September 2015, against 6% at end-2007. And contrary to the fears that have often been expressed, including by some of you, the current situation shows that these rules have not impacted lending and growth, in particular thanks to the positive effects of monetary policy. In 2016, the projects still underway should be completed. In particular in order to improve the comparability of internal models – and thus improve their credibility –, not to substantially increase overall capital requirements. To finalise and stabilise Basel III, not to open a new Basel IV.

The NGFS have started to explore this, but more work will be needed as the impacts of climate change and the transition to net-zero start to come into sharper relief. At the Bank, the Monetary Policy Committee (MPC) recently had its first informal discussion on the macroeconomics of climate change, and climate is an increasingly important part of G7 discussions between central banks and finance ministries. But more work and discussion is needed. Specifically, there is particular value in: (1) further integrating climate and macro modelling; (2) understanding and sizing related transmission channels; (3) going beyond the aggregate impacts to understand sectoral implications; and (4) assessing how the transition might affect the demand and supply sides of the economy. What is increasingly clear is that the effects of climate  3  See A first assessment of financial risks stemming from climate change: The main results of the 2020 climate pilot exercise, ACPR, May 2021 3  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  3  change and the transition to a net-zero economy will manifest over time - so analysis needs to span the short, medium and long-term to capture fully these effects. Let me now turn to how we are embedding climate risk management in the financial firms that we regulate. We have worked to deepen our understanding of risks to the financial system and build resilience to climate change both at the macro and micro prudential level.
It could accelerate if and when Brexit uncertainty is resolved in which case aggregate credit could begin to grow quickly and the FPC would need to consider how to respond. One can explain the increase in mortgage lender appetite by fierce competition in the mortgage market, generated in part by changes in the structure of UK banks following the implementation of ring fencing. But should we also infer any signal about sentiment and expectations? One could ask a similar question about the very aggressive growth in leveraged lending to corporates in the US, which in 2017 spread to the UK.29 The stock of UK leveraged loans is estimated to have grown by about a third in the year to 2018 thanks to gross loan issuance in that period which was nearly 70% larger than the preceding 12 months. This has been accompanied by a very marked reduction in underwriting standards for these loans, a large proportion of which have been securitised and sold to international investors. Overall, credit to UK corporates is growing pretty slowly and leveraged loans are a relatively small proportion of total lending to corporates; so what does the explosion of activity in the UK leveraged loan market tell us? A better understanding of what drives the formation of expectations in this area might also help us to decide how to react to these ‘pockets’ of increasing risk appetites. Should we treat them as idiosyncratic and unrelated and respond to them as such?

Households, businesses, and investors will often extrapolate the recent past to form their expectations of the future – if house prices have been growing, they consider further growth more likely.13 Robert Shiller’s 2000 book, Irrational Exuberance, demonstrated how there had been a clear, negative correlation between price to earnings ratios for US stocks in the 20th century and realised returns in the following ten years. At the time of publication, US stock markets had record high price to earnings ratios of more than 40 times – soon to be followed by the dot-com crash. Asset price bubbles and investment manias are often attributed to such ‘extrapolative’ expectations.14 In the first stage investors extrapolate from past performance which pushes up the price of the asset. A bubble dynamic then develops in which investors are drawn to buy the asset not for the extrapolated underlying performance but for the very short term capital appreciation. As the price growth represents demand for the asset based on the past behaviour of its price – and not information about what it will yield in the future – it will not be sustainable. These are of course very different views of how expectations are formed. Where prices in a rational expectations model are fully forward-looking (future performance determines today’s price), prices in an extrapolative world are fully backward-looking (past performance determines today’s price).