samchain/econo-pairs-v1 huggingface dataset:
The Riksbank do get suggestions that we should change to an inflation target similar to the one the ECB uses and aim for 0–2% in a medium-term perspective. In practice, this could very well lead to the same decisions concerning the repo rate as the model we have chosen and the difference should therefore not be exaggerated. That I personally prefer our approach has to do with at least four different aspects. Besides Goodhart’s argument that it helps us staying on track, doing what we should to keep inflation at 2%, there are three more arguments. 1. The more precise policy formulation has been beneficial for our thinking and the way it has developed, an aspect that does not usually get a mention in the literature. A clear framework kicks. Good and clear arguments that can be presented openly are needed for departing from adopted principles. 3  BIS Review 85/2000  2. Aspects of communication also favour our approach, with published forecasts and a simple policy rule. When explaining on television to the general public or to the audience at a labour conference in the north of Sweden, I can rely on exactly the same arguments as when I face Professor Lars Svensson at Stockholm University. 3. The clearer the policy, the easier it is to assess or evaluate. These assessments are an important part of the efforts to generate broader respect for what we do and healthy for our accountability.

Ardian Fullani: Recent economic developments in Albania Speech by Mr Ardian Fullani, Governor of the Bank of Albania, at the Joint Press Conference of the International Monetary Fund (IMF) mission, the Ministry of Finance and the Bank of Albania, Tirana, 9 March 2010. *  *  *  Honourable Mr. Minister of Finance, Honourable Mr. Bell, Honourable participants, During the last two weeks we have had an intensive dialogue with the IMF Mission, which visited Tirana in the framework of periodic consultations in terms of the observance of Article IV. During these discussions there is appraised the good performance of the Albanian economy during the past year and there is also emphasized the need for pursuing prudent economic policies, designed and implemented in the context of strengthening the macroeconomic and financial stability. Also, special attention has been paid to the need for ongoing structural reform that will support our long-term economic growth. The Albanian economy has recorded a positive economic growth during the past year and has successfully tackled the direct and indirect shudders of the global economic crisis. Moreover, the Albanian economy has passed the test, by maintaining the domestic economic and financial balances, which serve as a prerequisite for a sustainable and long-term growth. Thus, inflation rate fluctuated around 2 to 3 percent during 2009; the country’s external balances have shown correction signs, while the Albanian banking system remains robust and well-capitalized. However, the economic growth rate slowed down significantly during 2009.
In particular, foreign demand for euro area exports has declined, and euro area domestic activity has contracted in the face of weaker demand prospects and tighter financing conditions. The survey data and monthly indicators for November and December that have become available since our last meeting clearly point to a further weakening of economic activity around the turn of the year, indicating the materialisation of previously identified downside risks to activity. Looking further ahead, on the basis of our current analysis and assessment, we continue to see global economic weakness and very sluggish domestic demand persisting in the coming quarters as the impact of the financial tensions on activity continues. At the same time, we expect the fall in commodity prices to support real disposable income in the period ahead. Furthermore, the euro area should over time reap the full benefit from the effects of policy measures announced over recent weeks. BIS Review 5/2009  1  In the view of the Governing Council, this outlook for the economy remains surrounded by an exceptionally high degree of uncertainty. Overall, risks to economic growth remain clearly on the downside. They relate mainly to the potential for a stronger impact on the real economy of the turmoil in financial markets, as well as to concerns about the emergence and intensification of protectionist pressures and to possible adverse developments in the world economy stemming from a disorderly correction of global imbalances. It is crucial that all parties concerned make their contribution to lay sound foundations for a sustainable recovery.

Looking over the policy-relevant, medium-term horizon, annual HICP inflation is expected to be in line with price stability. This assessment is supported by available indicators of inflation expectations for the medium term. Risks to price stability over the medium term are broadly balanced. Unexpected further declines in commodity prices or a stronger than expected slowdown in the economy could put downward pressure on inflation, while upside risks to price stability could materialise particularly if the recent fall in commodity prices were to reverse or if domestic price pressures turn out to be stronger than assumed. It is therefore crucial that price and wagesetters fully live up to their responsibilities. Turning to the monetary analysis, the latest evidence confirms a moderating rate of monetary expansion in the euro area. Monetary trends therefore support the view that inflationary pressures and risks are diminishing. In analysing monetary developments it should be recognised that the intensification of the financial market turmoil since mid-September has the potential to affect the evolution of monetary aggregates significantly. Recent money and credit data indicate that this has already had a substantial impact on the behaviour of market participants. Both the broad aggregate M3 and, in particular, the components of M3 that are most closely related to the ongoing financial tensions – such as holdings of money market funds – have shown high month-to-month volatility of late.
Economic growth has been just as high, if not higher, since inflation came down to a low level, compared with the years when inflation was high and at times at double-digit levels. Chart: Monetary policy model requirements For the model to be relevant it should build on long-term relationships that we believe to be valid and it should be consistent with data. For example, the model’s relationships should describe how the interest rate works, in line with relevant empirical observations of the Norwegian economy. It is also of considerable importance to us that the economic mechanisms in the model should be understandable and easy to communicate. The model apparatus is to function as a useful tool, both in the internal process ahead of the monetary policy meetings and in Norges Bank’s external communication. Chart: Quote George Box A model will never be able to provide an exhaustive description of reality. In 1979, the British statistician George Box stated: “Essentially, all models are wrong, but some are useful”. Models can help to identify key driving forces, ensure a valid line of reasoning and consistency over time. This will enable the model to play an important role in the analytical basis for interest rate setting. At the same time, we must use common sense and experience when evaluating the model-based results and supplement these results with our own professional judgement. In this respect, the Bank has a pragmatic attitude regarding the use of models.

Hence, the keel has been laid for a single market for retail payments. And not just the single market for the euro area, but for Europe as a whole. SEPA and also the Payment Services Directive (PSD) are standardising retail payments across the EU-27. So what does that mean for the UK market? The UK banking market is highly interconnected with the euro area. We also see that several UK banks are actively involved in the SEPA process. They have recognised that the implications of SEPA extend to their UK business too. Ladies and Gentlemen, SEPA is not just about cross-border payments in euro and in continental Europe, it is about changing the retail payments infrastructure throughout the whole of Europe, including the UK, about bringing it up to a higher level of efficiency, quality and security. For example, the European PSD will significantly reduce transaction times to a maximum of three days and requires full transparency on the currency conversion. This will bring significant benefits to all bank customers – consumers and corporates, also in the UK. Let me in the following give you three major achievements of the SEPA process and outline briefly the way forward of the SEPA project. What has been achieved so far, and what are the next steps? The SDD launch has been the greatest SEPA achievement this year, and perhaps even of the entire project. The preparations for the launch of SEPA Direct Debit have taken up a lot of the banking industry’s time and energy.
It was in a determined effort to avoid them, having already cut interest rates as far as they could, that central banks then turned to alternative, “unconventional” monetary policies. For the most part this meant QE. Asset purchases are designed to keep a lid on forward rates, thereby supporting demand and activity. In the academic literature, however, many economists argued for an alternative – and potentially more powerful – option, namely a committed form of forward guidance. The economist Michael Woodford has been one prominent advocate[8]. Remember that the name of the game, when faced with this risk, and having run out of room to cut the policy rate any further, is to lower forward real interest rates. In this respect, a credible declaration that you will keep the actual policy rate low, even in the event of a future increase in inflation, does two things. It keeps nominal forward rates low. It also raises expected inflation. In the normal course of events the central bank would tighten policy as inflation rises, choking it off before it turns into a persistent overshoot. If you tell people you’re not going to do this then – as long as they believe you – this will push up inflation expectations and further depress the real rate of interest. In many simple economic models expected real interest rates have almost as big an effect on spending as the current real rate.

This was the first, and I daresay the last, time that MPC members were likened to an elite sportsman. )[2]  Chart 2: Forward interest rates and economic activity also co-moved closely before the financial crisis, less so afterwards  Six-month rolling averages. Combined IHS Markit/CIPS and CBI distributive trades lagged one month. Six-month change in one-year forward one-year LIBOR rate, spliced onto one-year, one-year OIS rate in 2022. Sources: ONS, IHS Markit/CIPS, CBI, Bloomberg Finance L.P. and Bank calculations. So if financial markets are able to react this way, without any explicit hints from the policy maker, why has there since been more communication from central banks about future policy – and more expectation of it in financial markets? What is the rationale for “forward guidance”? At least in theory there are two distinct types of guidance. The reasons for both, I think, are connected with changes in the economy in recent years. But they are quite distinct and it’s important to understand how. The first – sometimes described in the economics literature (somewhat grandiosely) as “Delphic” guidance – seeks in general to convey what is sometimes referred to as “private information” held by the central bank. This makes it sound more exciting than it really is. More often than not it means making clear to the outside world the policy maker’s view of how the economy might evolve over the future – its forecasts – and to clarify the so-called “reaction function” (how monetary policy might respond to possible future events).
Our job is to concentrate in the first place on monetary policy and the difficult systemic questions in the financial world. We have therefore decided to sell the Tumba works. In our opinion, the enterprise deserves owners that are more professional than the Riksbank. Moreover, our distribution system has been transformed into a limited company, Pengar i Sverige AB (PSAB), literally, Money in Sweden Limited. A major reconstruction has been completed and we now count on being able to sell the company at a good price. All in all, the focus on our core activities has enabled us to cut the number of employees, which at present is about 450. This can be compared with a figure between 15,000 and 16,000 for the Bundesbank or the Banque de France. In relation to the population, the corresponding number for the Riksbank would be almost 2,500. Bear in mind, too, that many of our functions have little or nothing to do with the size of the population. Strength and security As a newcomer I found that in certain respects the Riksbank resembled a traditional Swedish industrial estate. Those establishments were stable and often highly professional in their field, which might be high-grade steel or paper; but they also tended to be run autocratically and resist change. Central banks have also lived a closed existence, with a corporate spirit that was both good and bad.

See Panetta, F. (2022), “A digital euro that serves the needs of the public: striking the right balance”, introductory statement at the Committee on Economic and Monetary Affairs of the European Parliament, Brussels, 30 March and ECB (2022), “Digital euro – Privacy options”, presentation to the Eurogroup, 4 April. 4. Panetta, F. (2022), op. cit. 5. Consumers are already increasingly turning to non-cash payments. Only 20% of the cash stock is now used for payments, down from 35% 15 years ago. See Zamora-Pérez, A. (2021), “The paradox of banknotes: understanding the demand for cash beyond transactional use”, Economic Bulletin, Issue 2, ECB, Frankfurt am Main. 6. We are accustomed to using private and public forms of money interchangeably. Euro banknotes and coins are legal tender in the euro area, and cash is the only form of public money to which everyone can have direct access. Confidence in private money – bank deposits, credit cards and e-payment solutions – rests on the ability to convert it, at par, into public money. This allows payment systems to run smoothly and commerce to flow. 7. Panetta, F. (2021), “Central bank digital currencies: a monetary anchor for digital innovation”, speech at the Elcano Royal Institute, Madrid, 5 November. 8. Panetta, F. (2021), “The present and future of money in the digital age”, lecture at Federcasse’s Lectiones cooperativae, Rome, 10 December. 9.
In our assessment, Norges Bank gave weight to the weakening of the growth outlook for the Norwegian economy and attached importance to countering the risk of a pronounced downturn due to lower oil prices. Last week, Norges Bank presented its latest Monetary Policy Report with updated projections for developments in the Norwegian economy and a new assessment of the orientation of monetary policy. Developments in the Norwegian economy this winter have been broadly in line with expectations. Inflation remains close to 2.5 percent and unemployment has remained stable. So far, the effects of the fall in oil prices on the real economy have been relatively small. However, the outlook for the Norwegian economy has weakened somewhat. Oil prices have continued to fall and activity in the petroleum industry appears to be declining more than previously assumed. Wage growth in 2014 was lower than projected and there are prospects that wage growth will also be lower ahead than projected earlier. This will lead to lower inflation further ahead. At the same time, house prices continue to rise rapidly. This may increase household vulnerability and may trigger or amplify an economic downturn further ahead. The Executive Board decided to keep the key policy rate unchanged at 1.25 percent. If developments in the economy ahead prove to be broadly as projected, there are prospects that the key policy rate will be lowered.

Measured by GDP per capita, Norway now ranks close to the top. Even if we disregard the oil sector’s contribution to growth for a moment, Norway’s mainland economy has shown relatively robust developments. The ripple effects from activities on the continental shelf to the wider economy have been wide-ranging. A growing number of firms have targeted the oil industry. A state-of-the-art oil service industry has emerged. For many firms, the contracts on the Norwegian continental shelf have been a springboard to new export markets. Although Norway’s oil age began 40 years ago, the past 15 years stand out. From the end of the 1990s to 2013, the price of North Sea oil rose from about USD 10 to over USD 100 per barrel. High oil prices and a profitable petroleum production industry have been accompanied by record-high oil investment in recent years. Increased spending of petroleum revenues over the fiscal budget has provided a growth impetus to domestic demand. Employment has remained high and unemployment low for many years, even when the financial crisis hit in 2008. It was made clear at an early stage that Norway’s oil and gas resources belong to the Norwegian people and should be managed on their behalf. The tax system for private and state-owned oil companies and framework conditions for the petroleum industry were designed so that the bulk of the large resource rents generated by the industry would accrue to the Norwegian state. We have avoided making public sector budgets dependent on volatile income.
Stable inflation expectations can also have a stabilising effect on exchange rate expectations, but growth in public expenditure and prices for Norwegian exports goods also have an influence on exchange rate expectations. Surveys conducted by TNS Gallup show that inflation expectations two and five years ahead have remained virtually unchanged over the past year. A selection of economists expect annual inflation to be about 2½ per cent five years ahead and somewhat lower two years ahead. Norges Bank has sought to counter a fall in inflation expectations. Through the first half of 2004, we stated: “With the current low level of inflation, it is appropriate to be particularly vigilant as regards developments in consumer prices.”1 At the monetary policy meetings between September and November, the Executive Board stated that “particular weight must be given to factors that may delay an increase in inflation.”2 Inflation picked up towards the end of the last year. When we became more confident that inflation would not continue to fall, but appeared instead to be picking up, we refrained from repeating this statement. 1  See Norges Bank press releases of 21 April and 26 May. The press releases following the monetary policy meeting of 17 December 2003, 28 January, 11 March and 1 July 2004 included similar formulations. 2  See Norges Bank press releases of 22 September and 3 November. 2  BIS Review 38/2005  Output and employment After slowing around the beginning of 2003, growth in the Norwegian economy picked up markedly through 2004.

The recovery has been broad-based. The easing of monetary policy contributed to a sharp rise in private consumption and housing investment. Activity has picked up considerably in service industries and the construction sector. High petroleum investment, the global economic recovery, a weaker krone and lower wage growth contributed to boosting activity in manufacturing industry. Profitability has improved for mainland enterprises. Mainland fixed investment has also gradually increased. Thus, it may appear that growth in the Norwegian economy has become more self-driven. Even with a pronounced upswing in output, the increase in the number employed has been limited so far in this cyclical upturn. Measured in terms of the number of person-hours worked, however, employment growth was high last year. Registered unemployment has shown a small decline over the past year. Productivity probably increased more than normally in some industries in the early phase of the recovery. A marked fall in sickness absence may have reduced the need for new employees. Capacity utilisation in the Norwegian economy has increased, notwithstanding the decline in sickness absence and efficiency gains in the business sector. The output gap is a measure of capacity utilisation in the economy. We interpret a positive output gap to mean that output and capacity utilisation are higher than the level consistent with stable inflation over time. High domestic interest rates in 2002 and fiscal policy management contributed to substantially lower cost inflation in the private and public sectors over the past two years.
First, I will summarize the recent inflation developments, and then continue with the domestic and foreign demand outlook. Annual consumer inflation fell by 7.9 percent in the third quarter of 2013, slightly overshooting the July Inflation Report forecasts (Chart 14). This overshooting was mainly attributed to a weaker Turkish lira and higher unprocessed food prices. As a result, the main inflation indicators increased as well (Chart 15). The higher-than-projected inflation in the previous quarter was largely induced by the additional depreciation in the Turkish lira (Charts 14 and 15). I think it shall be useful to inform you about how the exchange rate assumptions are made in the Inflation Report. Traditionally, the Inflation Report takes the exchange rate realizations during the reporting month as given for the current quarter, and adopts a framework where exchange rates respond endogenously to the monetary stance and other economic developments afterwards. Accordingly, the exchange rate estimations are based on the July average in the July Inflation Report. The Turkish lira depreciated following the July Inflation Report, and this depreciation caused inflation to be higher than projected in the third quarter. This additional depreciation put an upward pressure of about 0.4 points on the end-2013 inflation forecast. Exchange rate developments affect core inflation via prices of core goods (Chart 16). Services inflation went up in the third quarter as well, but remained relatively more stable. Accordingly, core inflation indicators displayed an upward trend (Chart 17).

Hence, a front-loaded monetary tightening was implemented in the same period, which compensated for the distortion in inflation expectations. As of August, we decided to enhance the predictability of the Turkish lira liquidity policy in order to limit the impacts of global monetary policy uncertainties on the domestic economy. To this end, we adopted a strategy of reducing interest rate uncertainty by creating a framework where the relationship between global interest rates and domestic interest rates has largely weakened and market rates have become more sensitive to domestic macroeconomic developments as they should be. BIS central bankers’ speeches  1  In the third quarter, we continued to provide the market with foreign exchange liquidity via foreign exchange selling auctions, which fed into the growing Turkish lira liquidity deficit in the market (Chart 3). We cut the share of one-week repo in total funding in this quarter, which led to an increase in the share of funds from overnight and monthly lending facilities. Correspondingly, the CBRT’s average funding rate and the BIST interbank overnight repo rate increased (Chart 4). Moreover, in line with its strategy of enhancing the predictability of liquidity management, we have been sharing more information about the frequency and timing of the additional tightening since August. Recently, due to our cautious monetary stance, the Interbank Repo Market rates have been mostly hovering between 6.75 and 7.75 percent.