samchain/econo-pairs-v1 huggingface dataset:
Also, private consumption has increased in line with the significant increase in personal income. Still, we face significant risks, which I will look in more detail in a moment. Those coming from abroad have to do with the world economic situation I just described; domestically, they relate to the possibility of an exacerbation of output and expenditure. Beyond these risks, in the baseline scenario that today we believe to be the most likely, the Chilean economy will resume growth in line with the trend, while inflation will gradually return to levels that are consistent with the target. Let me now describe this scenario and the risks we have identified. Macroeconomic scenario The macroeconomic scenario facing the Chilean economy has not changed significantly in the past several months. As I just said, Chile’s output, and especially domestic demand, has grown above expectations. Some progress has been made abroad, but the risks derived from the Eurozone crisis are still present. In this context, headline inflation has fluctuated substantially in recent months, due to one-time events associated with supply shocks. Core inflation – discounting foodstuffs and energy – has declined slightly to near 2 percent y-o-y. The Board, continuing with what has been the tone throughout the year, held the monetary policy interest rate at 5 percent. Domestic situation As of November, y-o-y CPI inflation was 2.1 percent, after rising to almost 3 percent in October (figure 1). Y-o-y growth in nominal wages has remained roughly constant in the 6% to 7% range, although with differences across sectors.

The peso/dollar parity, with ups and downs, is somewhat lower than in the previous Monetary Policy Report, while the real exchange rate (RER) has shown no significant variation. The Board continues to estimate that, with the prevailing nominal exchange rate and currency parities, the RER is in the lower part of the range of values consistent with its long-term fundamentals (figure 3). In the baseline scenario, y-o-y CPI inflation will stand below the tolerance range in the coming months, to start rising later and approach 3% by the end of 2013 and over the projection horizon, this time the last quarter of 2014. There are several factors explaining the lower figures foreseen for the near future, including the high basis for comparison of late 2011 and the turn of 2012. Core inflation will post y-o-y variations below 2% over most of 2013, then it will rise gradually to near 3% over the course of 2014 (figure 4). This path assumes that wages will grow in line with productivity and target inflation. In addition, it relies on the methodological assumption that, over the projection horizon, the RER will be fairly unchanged from its recent values. Finally, the baseline scenario uses as a working assumption that the MPR trajectory will be stable, as suggested by the latest surveys available at the statistical closing of this Monetary Policy Report (figure 5).
Three matters concern us: the elements of the new Basel III capital accord that have not yet been fully finalised; the Financial Stability Board’s work on the regulatory framework for the treatment of systemically important institutions; and the new powers of the Banco de España under the draft bill on the supervision of credit institutions, which will foreseeably be approved in the first quarter of next year. I shall begin with Basel III. The new capital accord improves the comparability and, thereby, the credibility of capital ratios. Basel III increases capital requirements with better-quality instruments, and it seeks consistency and a uniform application across banks and countries. It also adds two new prudential tools: one in the area of liquidity, and the other in that of leverage. First, the inclusion of the leverage ratio, the relationship between Tier 1 capital and exposure both on and off the balance sheet, i.e. the total banking book, without taking into account risk weights. Calculations are made at the consolidated level and, in principle, the level is set at a minimum of 3%. It is scheduled to come into force in 2018, although an earlier date will probably be set for the required disclosure of this figure. This new tool has been designed as a straightforward measure that complements and acts as a floor to the minimum risk-based capital ratio. It aims to provide additional protection against what is known as “model risk”, i.e.

underestimating the regulatory capital needed further to a calculation using the sophisticated models allowed by Basel II and III. On the more technical side, there appears to be agreement on the definition and calculation of the ratio, the treatment of derivatives and repos, and operations with CCPs. But doubts remain over its final calibration and how it affects certain business models, specifically those most centred on retail activity. The Banco de España has supported the setting of this leverage ratio in Pillar 1 on the understanding that it can be a good prudential tool, once correctly calibrated. In this respect, the monitoring period prior to its entry into force will provide information and experience. Although European regulations envisage that countries may apply this ratio as they deem fit until its harmonisation in 2018, it is not the intention of the Banco de España, in principle, to bring forward its application. As regards liquidity, Basel III has added new regulatory requirements: a short-term liquidity coverage ratio (LCR), and a long-term requirement, the net stable funding ratio (NSFR). BIS central bankers’ speeches  1  The short-term liquidity coverage ratio is designed so that banks may have an asset buffer with which to meet their maximum foreseeable liquidity or funding needs over a period of at least 30 days. As what is involved is a safety margin, this ratio might at times of stress be below 100% of such maximum foreseeable needs, which is the level demanded once the requirements come fully into force.
But please remember that this should not be interpreted to mean that I have a different opinion of the Riksbank’s objectives. I consider it a good thing to conduct an open discussion on the policy pursued. And I hope that you intend to take part in this discussion, as the whole point of an open central bank is to facilitate such discussion and allow it to improve monetary policy. Riksbank focuses on total inflation picture I shall begin by describing the way the Riksbank works. The Riksdag has assigned two main objectives to the Riksbank: to maintain price stability and to promote a safe and efficient payment system. Today I shall concentrate on the first of these two objectives. The Riksbank has defined the target for monetary policy as to limit inflation to 2 per cent, with a tolerated deviation interval of plus/minus one percentage point. This tolerated interval indicates that deviations are likely, but that they will be limited. The objective is worded in terms of the consumer price index (CPI), which is a broad index consisting of the prices in a basket of goods and services consumed by an average Swedish household. As interest costs and indirect taxes included in CPI inflation are not assessed to have a long-term effect on inflation, the Riksbank has chosen to normally focus on UND1X, which is an index that excludes these factors. From time to time there may also be reason to disregard other price changes that are assessed as temporary.

If I had to choose a motto for a central banker, I think “better safe than sorry” would be very high on the list! More importantly we collectively showed that the London markets were equal to the challenge - even a once-in-a-millennium challenge - and were determined to make sure that come the first day of the new year London would be “open for business as usual”. What of the coming year? Well, I can predict that, after two years of new year working, we will all be able to enjoy our New Year’s Day bank holiday for a change next year! But beyond that, my crystal ball is no better than yours, and I am afraid that if you are looking for me to predict the course of exchange rates or interest rates over the next 12 months I am going to disappoint you. I would like instead to pick out a few themes which I think will be of increasing importance as the year unfolds. Firstly, I think we will increasingly see a fall in the absolute size of government bond markets, although once again Japan remains the exception. This is already happening here in the UK and in the US, as fiscal surpluses reduce bond issuance, and as the recovery in the rest of Europe continues budgets will increasingly move towards balance there too.
This means that if the Old Continent does not respond appropriately to the globalization challenges, in a few dozen years, all major global decisions will be made outside Europe, especially if the integration tendencies are continued in Asia, including the possible adoption of a single currency, which may be tentatively called the “asian”. 4 Thirdly, the share of Africa in the world's population will be a mirror image of the European trends and will increase almost threefold. It is still a very poor continent, of an unfavourable climate and poorly qualified workforce. However, in my opinion, the African countries will join the process of globalization in the manufacturing and services sectors sooner than it is expected, and some countries of the African continent may experience a very high economic growth rate in the decades to come, if their key political decision-makers take the chance that the globalization process gives. 3  For estimates please refer to http://esa.un.org/unpp/  4  On 4 May 2006 in Hyderabad, India during the 39th annual meeting of the Asian Development Bank a consensus was reached by the finance ministers of Japan, China, and South Korea. Han Ducksoo, Jin Renqing and Sadakazu Tanigaki agreed that under the Chiang Mai initiative, joint research will be conducted concerning the possibility of introducing the single currency in Asia. During that meeting, the parties decided to join the forces of the Asian countries to change the allocation of voting rights in the International Monetary Fund.

Prior to the introduction of inflation targeting in 1992, the UK had searched – in vain – to find a credible anchor for monetary policy and inflation expectations. The simplicity and clarity provided by a numerical target for inflation helped to establish the credibility of monetary policy and was instrumental in fostering the period of stable growth and low inflation enjoyed in the decade or so prior to the financial crisis. But in the aftermath of the crisis and faced with five years of almost no growth, it is natural for people to ask what monetary policy is doing to help get the economy going. The control of inflation is important but so too is supporting the creation of jobs as unemployment rose to its highest level for almost twenty years. There was a real risk that this would start to erode the trust and support of inflation targeting; to damage its democratic legitimacy. This was arguably evident earlier this year in the discussions in the media and amongst some commentators as to whether the framework of monetary policy should be altered, say to adopt a nominal GDP target or for the MPC to have an explicit objective for growth. A subtext of that discussion was that the inflation target was in some way acting as a constraint on the support that monetary policy could provide to the faltering recovery. To repeat: such criticism is misplaced.
The Supervisory  12  BIS Review 154/2010  Council continues to have a mix of administrative and supervisory duties, but its tasks were delimited by the Act of 1985. 40 The Supervisory Council shall supervise the Bank’s activities and ensure that the rules governing the Bank’s operations are observed. The council has its own secretariat, adopts the annual accounts of Norges Bank and approves its budget. The Bank continues in part to be the Storting’s bank. A substantial change has taken place over the past decade in that the Supervisory Council shall no long submit a report on its activities to the Ministry of Finance, but directly to the Storting. This is a partial reversal of the change to the Act that was made in 1949. In my judgement, the tasks of the Supervisory Council could be broadened. Among other things, it should be able to play a greater role in appointments to the Executive Board and Bank management, for example, through a formal right to make recommendations. 41 This could give the Supervisory Council an even greater sense of ownership over the organisation and strengthen their sense of commitment. In central banking circles it is easy to confuse independence, expertise and long-termism with infallibility. 42 Central bank independence in the use of instruments is contingent on central bank transparency and disclosure of the background for its decisions. This provides a basis for evaluating the Bank’s decisions. Moreover, the central bank is accountable.

The cause of this recession—a global pandemic—means that our economic future will be determined in large part by the path of the virus. It’s impossible to know exactly how and when workers and businesses will be fully back to work and when consumers will return to the businesses that are open. Despite the uncertainty, I’m going to spend some time today discussing what the scale of the challenge looks like for New York State, and for the U.S. economy as a whole. I’m also going to outline the Federal Reserve System’s response. The Fed is well-known for setting interest rates. But we play a number of other roles, and have a key responsibility for ensuring that the financial system is working to support the economy, which has been crucial during this crisis. Before I continue, let me give the Fed disclaimer that the views I express are mine alone and do not necessarily reflect those of the Federal Open Market Committee or anyone else in the Federal Reserve System. A Diverse State One of the particular strengths of New York State is its diversity—and this is especially true from an economic perspective. In Western and Central New York there are top-tier universities, manufacturing businesses, a thriving professional services industry, as well as popular tourist destinations. Since the 2008 financial crisis, the declining population trend in Upstate New York of earlier decades had largely stabilized. In recent years, new businesses had sprung up and unemployment had fallen to historic lows.
It also contributed to a growing central government debt. The economy was fuelled during economic upturns, which led to overheating and inflation. The Riksbank’s task was to try to defend the fixed exchange rate. The social partners were instead to contribute to low inflation by ensuring that wage increases were not too high. Soaring wage costs and poorer international competitiveness meant that the system broke down in the mid-1970s. To safeguard the objective of full employment, the krona was devalued by a total of around 40 per cent on five different occasions between 1976 and 1982. Each devaluation held unemployment down temporarily, but instead contributed to kindle the inflation fire until it was time for the next devaluation. Unemployment was also held down in that the number of employees in the public sector increased substantially. The number of persons employed in the public sector increased from 15 to 30 per cent between 1960 and 1980. In my opinion, unemployment was held down during this period using methods that were not sustainable in the long term. I consider this to be the first important aspect to bear in mind when discussing why unemployment is now much higher than it was in the 1970s and 1980s. Towards the end of the 1980s the situation became untenable. Everyone was then counting on the krona being devalued if the rate of increase in prices and wages rose too high. The driving forces for holding down prices and wages had thus disappeared.

In my opinion, it is therefore not possible to claim that an economic policy that aims for low and stable inflation would in itself lead to higher unemployment. 2  BIS Review 52/2007  Another part of the criticism is based on the assumption that it is not possible to buy lower unemployment by pushing up inflation, although there is instead apparently an assumption that if only the Riksbank would ensure that inflation remains at 2 per cent, then unemployment would stabilise around its long-term equilibrium level. In practice, however, there is no such simple relationship between inflation and unemployment. Firstly, unemployment is affected by a number of factors other than inflation, most of which have nothing to do with monetary policy, such as productivity changes, changes in regulatory systems and various shocks that regularly impact on the economy. Similarly, inflation is affected not only by developments in the labour market, but by many other factors. Empirical studies have shown that unemployment “explains” a relatively small percentage of total inflation. This means that inflation developments are largely “explained” by other factors than unemployment. Secondly, it has proved very difficult to assess what is a long-term equilibrium level for unemployment and moreover that this also varies over time. One conclusion of this is that even if the Riksbank were to always succeed in holding inflation at the target, this would be no guarantee that unemployment would be low and stable.
I saw further confirmation of the great potential of Italy and of the Italian corporate sector, but I also found unanimous agreement that one of the most important problems facing Italy is the insufficient labour productivity and consequently the rise of unit labour costs. It is a European problem, and not only an Italian problem, but in Italy it is particularly visible: we have to do all that we can to implement the Lisbon agenda aiming at accelerating productivity growth. But the Italian industrial structure is weak nowadays. What should be done? Research carried out in Italy and in Europe, more generally, has concluded that we are not benefiting sufficiently from productivity gains in sectors that use new technology (and not only in the sectors that produce the technology themselves) and this seems to be due to overly rigid labour, goods and services and financial markets. Structural reforms that would allow the economy to be made more flexible are the primary tools for achieving a leap in productivity. In the United States this was made possible in the mid-1990s. And, consequently? One should never underestimate the importance of investment in research and development, which are today insufficient both in Italy and in the euro area as a whole. You have mentioned structural reforms, which are currently at the heart of the Italian political debate on developments in the finance laws. Let us begin with the deficit-to–GDP ratio, which is well above the 3% limit. Is the situation in Italy a cause for concern for you?

Structural reforms of this sort have been decided upon by national governments within the framework of the agreements made in Lisbon and we should not forget that the ultimate objective is to increase the pace of economic growth in order to ensure more prosperity and provide more jobs for everyone, which is fundamental for the weakest and the poorest. Rather than finding a compromise between the various members of our society, between those that have costs and those that reap the benefits, I see it more as a compromise between the present and future. It is a forwardlooking investment and a better future for the weakest part of the population which entails costs at the beginning. And in any case let us not forget that we cannot ask our children and grandchildren to pay our bills! In Europe, the population is shrinking to the point that by 2020, according to different studies, there will be 20 million people available for work. In the United States, it is on the rise. How is this? Perhaps this is because the United States is a population with entire generations of immigrants in which the birth rate is higher. And then there is the cultural aspect, they are more optimistic than us. Why? This involves philosophical and cultural aspects and I am not convinced that they are structural.
If our analysis of the prospects for production and inflation shows that our repo rate path needs to be revised in a particular way so that monetary policy is well balanced, then we will do this. What lessons can we learn? So far we have only limited experience of the new system and it is difficult to draw any farreaching conclusions. But perhaps we can learn some lessons for the future already at this stage. To begin with, it is important to note that, apart from the differences between different market agents’ expectations, there may also be differences between market agents’ own forecasts for the repo rate and their forecasts for the interest rate path the Riksbank will publish. It will be important for us to analyse what these differences are due to and how they should be interpreted in order to be able to predict the reactions at the times of the interest rate decisions. It is also important that we should constantly strive to become clearer in our communication to avoid it being interpreted in a way we did not intend. The decision to begin publishing interest rate forecasts in connection with each monetary policy meeting should be regarded in this context. There are some indications that certain market analysts interpreted a couple of speeches by Executive Board members during the spring in a way that was not intended. They appear to have drawn the conclusion that the interest rate path would be revised upwards less than had been assumed previously.

…companies’ costs rose Annual percentage change, seasonally adjusted data  8  8 Unit labour cost Hourly labour cost Productivity  7  7  6  6  5  5  4  4  3  3  2  2  1  1  0  0  -1  -1 94  96  98  00  02  04  Note. The broken line refers to the Riksbank’s forecast in MPR 2007:2  06  08  Sources: Statistics Sweden and the Riksbank  Figure 6. Rising food prices Annual percentage change  40  20 The Economist commodity-price index for food (left scale) Consumer food prices (right scale)  30  15  20  10  10  5  0  0  -10  -5  -20  -10  -30  -15 95  96  97  98  99  00  01  02  03  04  05  06  07  Sources: The Economist, Statistics Sweden and the Riksbank  8  BIS Review 111/2007  Figure 7. Rising inflation expectations Annual percentage change  4  4 CPI Households Companies  3  3  2  2  1  1  0  0  -1  -1 00  01  02  03  04  05  Note. The broken line refers to the Riksbank’s forecast in MPR 2007:2.