samchain/econo-pairs-v1 huggingface dataset:
In such a situation, the mean squared gap in Figure 3 would lie in a north-west to south-west direction and determining monetary policy would entail weighing up whether to stabilise one more or less than the other. BIS Review 60/2010  7  Figure 4. The mean squared gap for CPIF inflation and output and hours worked respectively. Source: The Riksbank  Figure 5: The decision-making situation for Norges Bank in 2005 Figure 5 shows the policy decision facing Norges Bank in March 2005, which is an example of a case where there was a conflict between stabilising inflation and stabilising resource utilisation. 5 The problem at that time was that the inflation forecast was under the inflation target of 2.5 per cent, so that the gap between the forecast and the target was negative, while the forecast for the output gap was positive. In such a situation, a lower repo-rate path stabilises inflation around the target better but the output gap less well, and vice versa for a higher repo-rate path. The mean squared gap then lies in a north-west to south-west direction. This case is discussed in more detail in my Umeå speech and in my chapter “Inflation targeting” to be published in a new North-Holland Handbook of Monetary Economics. 6  5  Norges Bank (2005). 6  Svensson (2010b). 8  BIS Review 60/2010  Figure 5. Monetary policy alternatives for Norges Bank, March 2005  Source: Norges Bank  Are there any arguments against an extended repo-rate path?

It is therefore of course desirable that the extended repo-rate path is perceived as credible. As I mentioned earlier, it is possible that the extended repo-rate path with an unchanged repo rate further ahead would be perceived as less credible than a lower repo-rate path with a reduced repo rate now. In this case the effects are shown by the curves marked “Unexpected”. However, as the extended repo-rate path can be justified by the fact that it provides better outcomes for inflation and resource utilisation than the main scenario it may perhaps be perceived as being more credible, in which case the effects are shown by the curves marked “Expected”. 4  4  The effects of deviations from the repo-rate path of the main scenario on inflation, output and hours worked are calculated using the Riksbank's model Ramses with the methods described in Laséen and Svensson (2009) for expected deviations and Leeper and Zha (2003) for unexpected deviations. They are discussed in more detail in Svensson (2010c). The lower repo-rate path gives as an expected deviation (unexpected deviation in parenthesis) a largest increase in CPIF inflation of 0.42 (0.22) percentage points, in output of 0.33 (0.21) per cent and in hours worked of 0.35 (0.22) per cent. The extended repo-rate path gives as an expected deviation (unexpected in parenthesis) a largest increase in CPIF inflation of 0.48 (0.25) percentage  BIS Review 60/2010  5  Figure 2.
0,4 / 1,0 / 1,8  One approach to a more detailed separation of trend or core inflation from these types of transitory price effects involves looking at the various indicators of underlying inflation that have been developed at the Riksbank. Whereas annual CPI inflation in the period 1996–98 averaged 0.7 per cent, inflation as measured by UND1X, which excludes interest expenditure, taxes and subsidies, averaged 1.5 per cent. As measured by UNDINHX, which also excludes goods that are mainly imported, inflation amounted instead to 2.1 per cent. However, the latter indicator disregards a large proportion of the factors that contribute to a weaker price trend for goods in the longer run. 6. Conclusions about inflation 1996-98  ■  Inflation - measured with the CPI - was below the target and the lower tolerance limit during 1996-1998  ■  CPI-inflation has been markedly affected in all three years by transitory effects that are easy to identify  ■  Excluding more transitory price effects, inflation has been inside the stipulated tolerance interval  This review shows that in all three years (1996–98) inflation has been below the target expressed in terms of the CPI. However, excluding more transitory price effects that monetary policy neither can nor should try to counter in full, inflation has been inside the stipulated tolerance interval. I shall be returning to the reasons why price effects of this type should be disregarded in an appraisal of the Riksbank’s monetary policy.

Permanent and transitory inflation – a schematic account1 Let us now use some simplified examples to analyse how different transitory effects on inflation may arise and what they may imply for monetary policy. Note that we are now studying the direct effects on inflation and disregarding, at least in the second and third examples, the indirect influences that act in the longer run. 1  To illustrate the effects of the various shocks on the picture of inflation as measured with the various indexes, rules of thumb have been used in each example. In practice, a monetary policy situation may also include aspects that prompt the Riksbank to take other effects of its policy measures into account. 5  BIS Review 61/1999  7. Permanent and transitory inflation A schematic account Initial position  4  International slowdown. With unchanged repo rate inflation 2 years ahead drops to 1%. CPI and UND1X then 3 coincide. Repo rate cut by 2 p.p. The economy picks up and UND1X inflation returns to 2%. UND1X  2  CPI  However, the repo rate cut means lower house mortgage 1 expenditure; approximate effects: -1.2 p.p. after one year, -0.4 p.p. after two years 0 and some tenths in the 0 following year. Forecast  1  2  3  Example 1: an economic slowdown Assume that international economic activity suddenly falters. This will affect the economic situation in Sweden.
For one, the persistence of national borders in a European financial market has in the past created compliance costs and reduced the synergies of banking integration. A European Commission survey in 2005 found that opaque supervisory approval procedures were a major deterrent to cross-border banking M&As.4 Moreover, national considerations may have reinforced the fragmentation of retail markets during the crisis. For example, some commentators have argued that supervisors erected de facto “internal capital controls”5 within the euro area, which restricted the flow of funds between banks and within cross-border banks. A similar pattern can be observed in how national authorities in the euro area have dealt with failing banks. In general, non-viable banks were merged with other national banks, rather than being wound down or broken up and sold off. Thus, what could have been an opportunity to increase foreign competition in domestic markets, and indeed to work through the crisis more quickly, in some cases ended up increasing national concentration. To give a comparison with the US, the FDIC has resolved around 500 banks since 2008, mainly by selling parts of banks to other banks, whereas the equivalent figure for the euro area is around 50.6 All this suggests that the move towards a genuine Banking Union in the euro area could help create the conditions for deeper retail banking integration. A Single Supervisory Mechanism (SSM) should lead to harmonisation of rules and standards, and also remove distortions created by national borders.

First, our forecast presupposes that it will be possible to manage the debt crisis in Europe so that the acute problems can be resolved. There is a risk that the problems will continue and that the debt crisis in Europe will get worse, which may lead to weaker economic activity in Sweden and abroad. If this proves to be the case, monetary policy in Sweden will have to be more expansionary to mitigate the effects of the more severe crisis. Conversely, it is possible that political agreements will be reached fairly soon and that the financial unease will subside more quickly than we expected. This could lead to stronger economic activity in Sweden and abroad than expected, and it will then not be necessary for the repo rate to be so low. Secondly, the outcomes for inflation abroad have been surprisingly high recently, despite falling commodity prices and weaker economic activity. There is therefore a risk that the situation abroad will be characterised by economic stagnation and high inflation, so-called stagflation. Central banks abroad may then be faced with a very difficult balancing act. The risk of further weakening economic activity will reduce the scope for raising policy rates to  6  BIS central bankers’ speeches  combat inflation, which may result in inflation continuing to be high. All in all, there is therefore a risk that inflation abroad may not fall to the extent we expect. This will lead to higher inflation in Sweden too through higher import prices.
The krona thus appreciates today before moving towards the same anticipated future exchange rate as previously. However, empirical support for uncovered interest rate parity is mixed.1 As in all empirical analysis, it is difficult to isolate the effects of interest rate differentials on the exchange rate. Furthermore, there are difficulties in measuring expectations, and there may be frictions on the financial markets that mean that the relationship does not fully hold true. Be that as it may, the presence of other factors complicating the relationship is hardly reason to completely disregard it. 1  See, for example, Chinn and Meredith (2004) for an outline and Lothian and Wu (2011) for a recently published empirical study. BIS central bankers’ speeches  3  The exchange rate is volatile Another circumstance complicating the analysis is the tendency for floating exchange rates to be highly volatile. This is illustrated in Figure 3, which shows the development of the krona’s trade-weighted exchange rate. The figure shows that the krona can both depreciate and appreciate to a relatively large degree over relatively short periods. For example, the krona depreciated by almost 20 per cent in TCW terms between the second quarter of 2008 and the first quarter of 2009. Unease on the financial markets, which tends to weaken comparatively small currencies like Sweden’s, contributed towards this. Following this, the krona appreciated strongly and now lies at approximately the same level as prior to the financial crisis.

Overall, as of January of this year, we are down nearly 10 million jobs from the pre-pandemic level, a greater shortfall than we saw even at the worst point of the aftermath of the Great Recession. Locally, we’ve experienced considerable strain, given that much of New York City’s economy hinges on the leisure and hospitality industry. Job losses have been dramatic: New York was hardest hit at the start of the pandemic, and almost a year later the data still show a city under stress. While national employment was 7 percent below pre-pandemic levels at the end of 2020, employment in New York City was 12 percent lower.1 I hope that as workers return to their offices and the weather turns warmer we will start to see people frequenting the small businesses that are the lifeblood of our city. Unfortunately, job losses have not been only highly concentrated in particular industries, but also more concentrated among certain demographic groups. The pandemic and the ensuing economic downturn have done disproportionate harm to women, communities of color, younger workers, and the lowest paid.2 The data are particularly sobering when we look at communities of color. Recent research by my colleagues at the New York Fed shows that more Black and Hispanic workers lost jobs compared to white workers, and Black workers have been more likely to drop out of the labor force entirely, making it more challenging to rejoin in the future.
None of these changes is obvious, to say the least, but none should be taboo. II. Supervision: lessons from an active euro area model Fair enough about implementing Basel III; but then comes the next suspicion: Credit Suisse failed despite being Basel III compliant. The answer is clear: good regulation is necessary; it's never sufficient. The risks generated by specific business models such as the asset-liability mismatch at SVB or the weak profitability and weak internal controls that dogged Credit Suisse should typically have led to higher supervisory requirements. Supervision should not be seen as a static business; it must be active and tailored to banks characteristics. This is precisely the spirit of the "Pillar 2" in the Basel framework, with the annual Supervisory Review Process. I sometimes hear doubts about supervision, which some believe should be treated as a legal dialogue, cautious in its form, and slow in its effects. No: supervision can and must be intrusive – including on-site –, exercised by highly skilled practitioners, quick in its reaction, strong in its powers. This is not wishful thinking: it has been our experience for decades in the French ACPR, and now for years in the European SSM. Active supervision is indeed one of the great successes of our European Banking Union. In light of the recent reality test, I believe there are two lessons to be learnt from our model.

Because if we are, the instant effectiveness of some forward-looking commitments and guidance that should never have been issued at all, will give way to a much longer-lasting decrease in our ability to guide the markets in the future, and thus to an increase in the risks faced by each and every economic agent. Our mandates and institutional frameworks may develop, but our primary objective of assisting economic development and growth by preventing abrupt changes in economic indicators – be it the price level or broad measures of the stability of financial systems – will very likely stay unchanged for quite some time to come. Generally speaking, the goal of central banks is to provide some certainty in fundamentally uncertain economies, the uncertainty being based largely on the workings of their monetary systems. In pursuing this goal, we will need three things. First, we will need external recognition of the importance and usefulness of our independence. Second, we will need to nurture good relations with our colleagues; we have made great strides in this area, but much remains to be done. And finally, in our inner circles we will need the support of our nearest and dearest. So, let me end by thanking my wife for being such a rock of support in my life, my parents for teaching me that things should be done properly or not at all, and my kids for being such a joy every time I am with them. Thank you. 2  BIS central bankers’ speeches
Tarisa Watanagase: Prospects and challenges for the Thai economy in 2010 Dinner talk by Dr Tarisa Watanagase, Governor of the Bank of Thailand, at the British Chamber of Commerce, Bangkok, 30 November 2009. *  *  *  Distinguished Guests, Ladies and Gentlemen, First of all, I would like to thank the British Chamber of Commerce for inviting me to be here tonight. It is my pleasure to join you once again at this prominent annual gathering. Last year we had a fruitful discussion on “What determines the future of the Thai economy”. If you may recall, I imparted on the audience some words of wisdom for all policymakers, which is to smooth short-term pain, and to achieve long-term gain. Last year’s speech took care of the latter part, in which the key message was a call for collective efforts to raise the economy’s potential output in order to achieve sustainable long-run prosperity. We, however, did not spend much time on the former part as we were yet to witness the complete fallout from the collapse of Lehman Brothers. Today, we all know that our get-together last September was at the onset of the greatest economic contraction over the last 60 years. The collapse of Lehman Brothers on Sep 15, 2008 created a gigantic shockwave in the world financial markets with its ripples subsequently evolving into an economic tsunami that wiped out so much economic wellbeing all over the world.

The MPC, therefore, decided to maintain the policy interest rate at 1.25 percent per year  2  BIS Review 164/2009  during the most recent meeting. At the same time, the BOT is expecting that the Thai economy will return to a positive growth of 3.3–5.3 percent in 2010. Ladies and Gentlemen, I believe we have a consensus that the worst of the global economic crisis is already behind us. At this juncture, policymakers and businesses are starting to look beyond the crisis and gauging what lies ahead. At the Bank of Thailand, we envisage the following three challenges for the post-crisis era. First, the outlook for Thai export market will not be as good as the pre-crisis period. This is because the global financial crisis is likely to reduce both the purchasing power and the potential growth of Thailand’s major trading partners, especially the industrialized economies. Moreover, as the unemployment rates continue to increase in the G3 countries, protectionist sentiment may be intensified in an attempt to protect jobs at home. It is a common knowledge that, since the 1997 financial crisis, Thailand has relied on exports as our primary engine of growth. This dependency is expected to continue for quite some time as our domestic demand is not large enough to substitute the purchasing power from abroad. Therefore, exporters need to be more adaptive, while policymakers need to ensure supportive policies.
Inflation and monetary policy outlook  Having summarized the Central Bank’s monetary policy stance as well as the effects of this stance on the markets, I would like to share with you the economic outlook underlying our revised forecasts. The first-quarter data on the GDP were largely consistent with the outlook presented in the April Inflation Report. Accordingly, the GDP expanded by 11.7 percent year-on-year during the first quarter of 2010 (Figure 23). This increase was driven by the low level in the same quarter of 2009. Meanwhile, in seasonally adjusted terms, the GDP followed a nearlyhorizontal course by growing by 0.1 percent quarter-on-quarter (Figure 24). BIS Review 133/2010  9  The weak global economy continued to weigh on economic activity and employment in external demand-oriented sectors. The recovery in the private sector gained stability in line with our forecasts. In this respect, the largest contributors to growth in the first quarter became private consumption expenditures and the change in stocks. This was also affected by the low base in the same quarter of 2009 (Figure 25). Meanwhile, public expenditures contributed to growth by –0.8 points (Figure 26). Recent domestic demand indicators show that private consumption demand continues to grow and it will run above pre-crisis levels in the second quarter. Meanwhile, despite the rebound in the first quarter, investments remain below pre-crisis levels. These developments indicate that the total final domestic demand continued to grow in the second quarter (Figure 27).

BIS Review 133/2010  11  When assessing the external demand outlook, it is important to consider our trading partner’s headline growth forecasts as well as the composition of growth. In this respect, it is noteworthy that the latest Consensus Forecasts release indicates a noticeable change in the composition of the euro area 2011 growth forecasts. More specifically, along with the depreciation of the euro owing to financial distress and the weaker growth outlook, euro area private consumption and investment forecasts have been revised downwards, thereby emerging as a potential factor to affect our external demand prospects adversely (Table 2). In other words, despite the absence of a major revision in euro area growth forecasts, the change in the composition of GDP growth indicates a weaker external demand outlook for Turkey compared to the previous Report. Although weak external demand restrained recovery in industrial employment, the steady recovery in the labor market continued in the last period and non-farm employment posted a significant rise in the last one-year period fuelled by the steady increase in employment in construction and services sectors (Figure 30). The continued rise in labor force participation rates in the first quarter of 2010 curbed further decline in unemployment rates. Unemployment rates fell markedly in April amid increased employment and reduced labor force participation (Figure 31). Leading indicators imply that the recovery in non-farm employment will continue, albeit slower.
As a net importer of energy the sustained terms of trade shock to the UK from persistently high energy prices – and from the smaller but still significant increase in food prices and manufactured imports which also took place - has left the UK economy poorer. These price shocks have been the single biggest driver of the recession and very high inflation the UK economy is having to contend with. The ratcheting up in gas future curves has been a feature for most of this year (Chart 2). At the time of the August 2022 MPR the futures curve peaked at 450 pence per therm which would have implied average household energy bills of £ from October 2022, nearly three times higher than a year earlier. Although the futures curve has fallen back since and remains on a declining trend into the medium term, persistence has become more evident. Sources: Bloomberg Finance L.P. and Bank calculations. Notes: Spot price is the one-day forward price of UK natural gas. Latest futures curve as of cob 21 November 2022. Bank of England  Page 6  In the November 2022 MPR the MPC moved to adopting the full futures curve for its conditioning assumption for the forecast of energy prices. In November 2021, energy prices directly accounted for only 0.8% of the inflation forecast for 2022Q4 compared to a direct impact of 3.8% in the latest forecast (Chart 3). Sources: Bloomberg Finance L.P., Department of Business, Energy and Industrial Strategy, ONS and Bank calculations.

Tarisa Watanagase: Future regulatory challenges for emerging markets – a case for Thailand Speech by Dr Tarisa Watanagase, Governor of the Bank of Thailand, at the Association of International Banks (AIB) Dinner Talk, Bangkok, 19 October 2009. *  *  *  Chairman, Board members and members of the Association of International Banks, Distinguished Guests, Ladies and Gentlemen First of all, I would like to thank you for inviting me to join you today. I welcome the honour and look forward to the opportunity of meeting you, especially at this important juncture in the history of global financial system development. In the past two years, we witnessed one of the most severe financial crises in modern time, and with it, a sharp impact on the global economy, especially after the demise of Lehman. Today, the global financial market has stabilized, albeit not having returned to normal, with many major parts still in retrenchment such as securtisation market. Today, an almost one year anniversary of the global fallout, the Dow Jones once again retraced its step, and touched 10,000 points. There are increasing positive signs of global economic recovery. Nevertheless, there are still significant uncertainty and downside risk, going forward. These include uncertainty on the exit policy of stabilization measures of various countries, the differential speed of adjustment of various regional economies, and not least, the impending challenge of regulatory reform demanded by the public at large. Throughout this turbulent period, Thailand’s financial system has remained resilient and stable.