samchain/econo-pairs-v1 huggingface dataset:
Third, my visits to the Bank’s regional agencies over the past few weeks talking to businesses leave me confident wages are not about to embark on a rocket-propelled ascent. Settlements seem to have edged up from first to second gear: they are now often in the “2–point-something” zone. But with the exception of a few regions and sectors, I do not yet see evidence of wage inflation going through the gears into third or fourth. Fourth, since the May Inflation Report sterling’s effective exchange rate has appreciated a further 3%. That will exert a downward drag on demand and inflation over the policy horizon: using the Bank’s model ready-reckoners, by around 0.2 percentage points at the two-year horizon. In other words, the exchange rate news may be more important quantitatively for the two-year-ahead inflation outlook than the recent news from wages. April’s wage data was news, encouraging news. And the Phillips curve may well be reemerging after several years in hibernation. But one swallow does not a summer make. As Aristotle inexplicably did not add, “especially once you adjust for compositional shifts”. Wage growth is causing some fluttering, but not in this dovecote. One reason for that is because expectations of inflation (the MPC’s primary objective) at the two-year-ahead point (the MPC’s preferred horizon) are skewed, if anything, to the downside. Chart 18 plots the MPC’s forecasts for inflation at different horizons, alongside companies’, households’, financial markets’ and professional forecasters’ projections. At the two-year point, outside forecasters’ inflation projections lie below the MPC’s.

Mian, A and Sufi, M (2014), ‘House of Debt’, ISBN: 978-0226271651. Slovic, P (1987), ‘Perception of risk’, Sciences, New Series, Vol 236 No 4799. Shafik, M (2015), ‘Interpreting the yield curve: pessimism or precaution?, VOX-EU, available at: http://www.voxeu.org/article/interpreting-yield-curve-pessimism-or-precaution. Summers, L (2014), ‘U.S. Economic Prospects: Secular Stagnation, Hysteresis, and the Zero Lower Bound’, Business Economics Vol 49 No 2. Velde, F (2009), ‘The Recession of 1937—A Cautionary Tale’, Federal Reserve Bank of Chicago Economic Perspectives 2009 Q4, available at: https://www.chicagofed.org/publications/economicperspectives/2009/4qtr2009-part2-velde. Weiller, K and Mirowski, P (1990), ‘Rates of interest in 18th century England’, Explorations in Economic History Vol 27 Issue 1. Wolf, M (2014), ‘The Shifts and the Shocks: What we've learned - and have still to learn from the financial crisis’, ISBN: 978-1846146978. BIS central bankers’ speeches  13
Rare events, even when dramatic at the time, lose their power to shape policy as memory recedes. The role of institutions is to retain a collective memory and to resist the temptations of the present. That is one of the most important roles of a central bank. It is accepted as such in the domain of monetary policy. And there is an equivalent role in financial stability. The introduction of simple and robust policy tools into a regulatory regime based on the exercise of constrained discretion would make it easier to resist overly rapid expansion of financial institutions. In particular, the authorities should maintain a clear focus on the issues that matter when the worst occurs – liquidity and leverage. It should be intrusive, in the sense of knowing what is going on, but not bureaucratic. A system in which it is easier for a large bank to expand and then destroy its balance sheet than for an individual to open a bank account has lost focus. That is not the fault of regulators, but a reflection of the pressures and incentives they have faced – from all of us. As a Kennedy Scholar at Harvard, I have always treasured Harold Macmillan’s words in his tribute to John F Kennedy. He was, said Macmillan, a man “whose eyes were on the horizon but whose feet were on the ground".

A shift in labor force from agricultural to non-agricultural sectors has been experienced in many developing countries. Rapid productivity gains observed throughout the post-war period, have been slowed in the last decade. Moreover, the recent drought that hit most parts of the world created a supply crisis, aggravating the upward trend in food prices. On the demand side the huge jump in energy prices and rising environmental and political concerns force developed countries to seek alternative energy sources. The production and  BIS Review 109/2008  1  consumption of bio-fuels increased rapidly, particularly after the European Parliament adopted the Common Agricultural Policy reform in 2003 and the US Senate approved the Energy Policy Act of 2005. As a result, prices for commonly used bio-fuel crops, such as corn, wheat, sugar cane and canola, started to climb. During the 2004-2005 period, only 7 percent of total corn production was used to produce bio-fuel, but this share is expected to increase to 17 in 2008 and 31 percent in and 2011. The increase in purchasing power of households in fast growing and emerging economies with large populations also put strong demand pressure on international food prices. What is the contribution of these factors in food price inflation, especially exogenous ones such as the adverse weather conditions? What is the extent of the role played by factors? Is it possible to control domestic food prices through monetary policies?
It could set in motion a complex of effects on aggregate supply and demand, on inflation, equity prices and interest rates. Just to give a few examples, let me briefly mention the following effects: First, a positive productivity shock raises the economy’s potential growth rate. It also affects aggregate demand through new, profitable investment opportunities, higher equity prices and expectations among households of higher permanent income. One question for policymakers is whether the demand effects are so powerful that they have the potential to outpace the growth of aggregate supply in the short and medium perspective. Second, there could be temporary disinflation effects at work if the increase in productivity is unexpected initially. If wages are slow to adjust, higher productivity growth lowers unit labour costs and thereby reduces price inflation. Here again there are important questions for policymakers. Should this effect be allowed to result in a temporary reduction of price inflation or unemployment? Third, an increase in the trend rate of productivity growth could also result in a higher equilibrium real interest rate, when the output gap is closed, in order to balance saving and investment. Fiscal policy and the development of public financial balances could at least partly offset this effect, as could the economy’s degree of openness. All this implies that monetary policymakers, also in Europe, could face quite a few challenges. One of them is to identify structural changes and distinguish these from cyclical variations. Another challenge is to detect the magnitude of the effects.

Less extreme is the euro zone, where, after a period of slow growth in the area as a whole, recovery is now well established. The internal imbalances in each country - differences between growth of domestic demand and the supply of output - are the mirror image of the external imbalances - current account surpluses and deficits. Widening imbalances are unlikely to be sustainable for long. But the extent to which they will be self-correcting, or will require policy adjustment, depends in large part on why they have arisen. This is my second question - why have the imbalances arisen? Sustained current account deficits can reflect profitable investment opportunities that exceed the supply of domestic savings so that it is necessary to borrow from abroad. And the most popular explanation of the recent rapid growth in domestic demand, especially in the US, is as the consequence of a rise in productivity growth, and investment opportunities, reflecting the so-called “new economy”. It has been pointed out by several economists, including Alan Greenspan and my colleague John Vickers, that an increase in trend productivity growth might increase demand by more than it raised supply initially, as firms invest in new technology and consumers anticipate higher future incomes and spend today out of this revised estimate of their “permanent” income. Hence new information technologies, because they raise  BIS Review 34/2000  2  potential future output in the economy, would add to demand today.
In addition, there is now a broad consensus on risk measurement approaches. The main point that is still undecided and which continues to occupy the Committee members is the setting of the so-called “output floor” for banks that apply internal models. Let’s be clear: I read and hear the banking industry, and French banks in particular, giving its advice for negotiations on this point. A little restraint would not go amiss, and it is not our intention to defend corporate interests. If an output floor of 75% is not acceptable, it is because this floor – and consequently the standardised approach – would become the constraint for half of the international banks. I must stress that our goal is to  finalise Basel III, based on improved models that remain risk sensitive, and not to move onto Basel IV, which would use the standardised approach. Therefore, an agreement must be reached on a lower output floor along with a tightening of controls over the banks’ internal models, much like the targeted review of internal models (TRIM) that was approved for the Single Supervisory Mechanism and the results of which we are more than willing to submit to peerreview. This stance is shared at the very least by other European countries such as Germany and the Netherlands, and by the European Commission. International cooperation on financial reforms is a common good that has been extremely precious during these past eight years and is crucial to our future.

30 March 2017  Speech Már Guðmundsson, Governor of the Central Bank, delivered at the 56th Annual Meeting of the Central Bank of Iceland, 30 March 2017. Prime Minister, Minister of Finance and Economic Affairs, Speaker of Parliament, bank directors, foreign ambassadors, ladies and gentlemen! We have come together today for the 56th Annual Meeting of the Central Bank of Iceland. At the time of last year’s meeting, the domestic economy was considered relatively strong. GDP had risen above the pre-crisis peak. National income had risen even more in recent years because of improved terms of trade. Unlike many previous periods of full employment, the economy was well balanced internally and externally, as could be seen in a two-year period of inflation at or below target and a sizeable current account surplus. This was a good position, but we also realised that it could be fragile, as demand pressures were mounting and there was a real risk of overheating. Developments internationally had been favourable for us in many ways, but the tide could turn. We therefore needed to be on the watch, and economic policy had to take this risk into consideration. Then what do we say now, when growth has accelerated even further and demand pressures are even greater, yet inflation has remained below target, inflation expectations have subsided to target, the 2016 current account surplus was at a historical high, and we own more than we owe abroad?
Trade was roughly in balance. The oil price has rebounded somewhat recently, but is not expected to reach the levels we saw a few years ago. Thus, the high Norwegian current account surpluses may belong to the past. Given the uncertainties related to petroleum wealth, a spending rule more cautious than the permanent income rule seems to be a reasonable strategy. Political feasibility Allow me to round off this discussion with some reflections concerning practical policy. My point is that fiscal guidelines must be politically acceptable and understandable to the wider public. Simplicity and robustness are important concerns. Rules that are not adopted by policymakers carry little value. The Norwegian fiscal rule was introduced in 2001, exactly 30 years after the first oil was extracted from the Norwegian continental shelf. This illustrates that it was not straightforward to arrive at a strategy for how our natural resource wealth was going to be spent. The need to decouple current spending from current revenues was underscored early on, and potential mechanisms were discussed, but these concerns were not reflected in actual policy. In periods, all the oil and gas revenues and more were spent. The fund mechanism was established in 1990, during Norway’s deepest recession in the postwar period. At the time, it was not obvious that the fund would gain much value. The government ran budget deficits in the following years. A first deposit was made in 1996, reflecting a net fiscal surplus. From then on, the value of the fund started to increase quite rapidly.

Against this background of low profitability, banks have already made significant efforts to reduce their operating expenses, by adjusting their productive capacity. The number of banking groups has been reduced by 44% since 2007. And, from their peak levels in 2008, 3/7  the number of offices and employees in the banking industry have been reduced by 37% and by 31%, respectively. Orderly correction of the excess capacity in the Spanish banking industry has raised its level of efficiency relative to the banking systems of other European countries. However there is still room for further improvement. 2 New technologies - FinTech The second challenge facing traditional banking activity arises from the development of new technologies and entry into the banking market of so-called FinTech companies. Banks are sometimes presented as rigid, inefficient institutions, in contrast to new agile unregulated businesses, which seek to offer a better service to customers through a broad range of innovations. An extreme view is that these businesses could actually displace credit institutions from the provision of traditional financial services. In my opinion this is a simplistic, distorted view of a much more complex reality. Certainly we are facing a major technological transformation of banking activity. Permanent connectivity and the sheer number of mobile devices affect the way in which financial services are provided and used. Users increasingly demand the ability to access their current accounts and to initiate transactions at all times and in all places.
17  Figure 15 MPR corridor (*) (quarterly average, percent)  13 12 11 10 9 8 7 6 5 4 3 2 1 0  Dec.22 corridor FTS EES Sep,22 corridor MPR  24.IV  24.III  24.II  24.I  23.IV  23.III  23.II  23.I  22.IV  22.III  22.II  22.I  21.IV  21.III  21.II  21.I  Forward  (*) The corridor is built by following the methodology described in Box V.1 in March 2020 MP Report and Box V.3 in March 2022 MP Report. For dtails, see methodological note (figure II.1 in chapter II of December 2022 MP Report). Source: Central Bank of Chile. Table 1 Domestic scenario  2021  2022 (f) Sep.22 MP Dec.22 MP Report Report  2023 (f) Sep.22 MP Dec.22 MP Report Report  2024 (f) Sep.22 MP Dec.22 MP Report Report  (annual change, percent) GDP Demanda interna Domestic demand (w/o inventory change) Gross fixed capital formation Total consumption Private consumption Goods and services exports Goods and services imports Current account (% of GDP) Gross national savings (% of GDP) Nominal GFCF (% of GDP)  11.7 21.6 18.0 17.6 18.2 20.3 -1.5 31.3 -6.6 18.8 24.0  1.75-2.25 1.2 0.9 -3.3 2.2 1.4 1.3 -1.4 -6.3 18.9 23.5  (f) Forecast. Source: Central Bank of Chile.

The estimates incorporated the price increases associated with Russia's invasion of Ukraine, with the knowledge we then had of how the conflict would unfold and its implications. While at the time inflation already appeared to be a global problem, it has since worsened, due to a protracted war, the spread of problems in international supply chains and transportation costs, and the effects of China's weak real estate sector and its zero Covid policy. On top of all this, there was further persistence in a context of significant inflationary surprises and heightened inflation expectations. Thus, we come to the end of the year with a sum of new shocks that were installed in our economy, which already exhibited important imbalances that needed to be corrected. During this period, financial markets have shown high volatility. At home, we have had to face it while immersed in a context of high uncertainty, which peaked in July. In that period, the local exchange market experienced important tensions in its price formation process, particularly in exchange rate derivatives. This led us to announce a foreign exchange intervention aimed at reducing the probability of significant distortions in the operation of other segments of the financial market. This year has not been easy, nor were the previous ones. In this challenging period, the Bank has continued to make progress in various areas.
And it was that ‘design feature’, coupled with weak governance, and the huge stock of assets priced off LIBOR, which gave such a strong incentive for manipulation. Though governance arrangements for LIBOR have since been strengthened, the vast majority of term LIBOR rates remain largely or wholly based on judgment, reflecting the absence of any material underlying market (Figure 2). -  Third, despite these two profound drawbacks, the informational and liquidity advantages of using a common established benchmark, coupled with the deep embedding of LIBOR in a range of systems, accounting and regulatory requirements have meant moving away from the use of LIBOR has required determination, forward-thinking and co-ordinated effort – even for those large parts of the market where it is manifestly the wrong rate to use. 5  All speeches are available online at www.bankofengland.co.uk/news/speeches  5  Figure 2: Input sources for current LIBOR tenors 4  What opportunities will a post-LIBOR world offer? Taken together, these three observations show why LIBOR transition is both necessary from a risk perspective and beneficial for the long-term efficiency of the financial markets, whilst also being unpopular in terms of the one-off transition costs involved. Indeed, there is a material risk that those transition costs are obscuring a clear perspective of the commercial benefits to users of moving beyond LIBOR. What are those benefits? It would be brave for me as a public official to attempt anything approaching a complete answer to that question.

But delivering it is as complex a task as any the financial sector has faced over the past decade, involving a global network of market participants and public authorities, and touching most systems, products and markets in some way. 1 Small wonder then that many firms see LIBOR transition as a ‘must do’ more than a ‘want to do’. But that perspective misses a key point: LIBOR is past its sell-by date – not just in risk terms, but in business terms too. It was designed to solve the problems of a very different era, when markets were far less transparent, and far less adept at packaging and repackaging risk. With the tools we have today, a post-LIBOR world offers many new and better opportunities: to meet the borrowing needs of households and firms; to allocate and manage risk; to express views on, or hedge against, the future paths of interest rates and credit risk; and to exploit new technologies. So more lightbulbs – fewer clenched fists! Firms who grasp these opportunities early will have a real edge. In sterling markets, we have already seen how quickly specific instruments can switch away from LIBOR when the necessary foundations have been laid and first-line business teams then put their shoulder to the wheel. In Floating Rate Notes, sterling securitisations and large swathes of the cleared derivatives market, innovation and competition has driven a virtuous circle of rising liquidity and rising volumes. Taken together, these changes put sterling markets at the leading edge of global transition.
Paul Tucker: A few remarks on current monetary policy in a rebalancing economy Speech by Mr Paul Tucker, Deputy Governor for Financial Stability at the Bank of England, at The Joint 1900/City Club Lunch, London, 22 November 2011. *  *  *  The outlook for economic activity has deteriorated over the past few months. The MPC has responded with a further round of quantitative easing to underpin demand, and so reduce the chance of inflation undershooting our target in the medium term. Monetary credibility: accommodating the price level shocks Our ability to provide and sustain that stimulus depends absolutely on the credibility of our commitment to the 2% inflation target. If our credibility were to slip and medium-term inflation expectations were to rise, we would have to run with a tighter monetary stance than otherwise in order to put the genie back into the bottle. The Committee’s most important judgment over the past year or so has, accordingly, been that the elevated rate of inflation, now about 5%, is temporary. We have had conviction in that judgment because of the observable upward impulses to the price level from sterling’s depreciation, the VAT increase, and the rise in commodity prices. There is occasionally a rather odd debate about whether the MPC could have avoided the consequent increase in inflation. Big picture, the answer is that we could have done, but we chose not to. We have, in effect, accommodated something like half of the cumulative impulse to the price level.

Rebalancing: impediments We recognise that the stimulus we have provided risks slowing further progress with the necessary medium term rebalancing of the economy. Rebalancing will not, in any case, be easy. The composition of demand in the UK was imbalanced for so long that the productive capacity of economy is unbalanced. Crudely, the balance of aggregate demand needs, over the medium term, to shift away from household and public consumption towards net trade and investment. Up to a point, some of that has already happened. But domestic monetary expansion will work partly through deferring some of the restructuring of household balance sheets, underpinning consumption. And, looking ahead, the greater question is whether rebalancing can be sustained as and when the economy returns to “full employment”, ie when the economy’s spare capacity is utilised again. Rebalancing is already impeded by tight credit conditions. Although our banking sector has done much to strengthen capital and liquidity over the past few years, it would still have ground to cover in rebuilding balance sheets even if the external environment were more propitious. With instability from the euro area crisis threatening the UK, our banks cannot avoid being exposed to outsized risks. That is reflected in elevated funding costs, which they pass on to their customers to a greater or less extent. The gradual improvements in credit conditions seen until the summer, and documented in the Bank’s quarterly Credit Conditions Survey, have been arrested for now.